This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: 1 Problem Set IV Solutions Use the data in the matlab data file LOTTERY 04.MAT. There are four variables in this data set: HOMEVAL (value of home for homeowners, in thousands of dollars), EARN (yearly earnings, in thousands of dollars), PRIZE (lottery prize, in thousands of dollars per year), EDUC (in years). We will look at the relation between the value of the home and the lottery prize, control ling for earnings and education. 1. What is the sample size. How many observations are censored (having zero housing values)? Calculate the mean, standard deviation, minimum and maximum for all four variables. There are 22 observations with zero housing values. Table 1: Summary Statistics (N=231) home value earnings education yearly lottery prize mean 157.7860 14.5369 12.9693 55.5767 std 102.7820 13.6493 2.1840 62.5632 minimum 8.0000 1.1390 maximum 800.0000 42.2577 17.0000 484.7890 2. Use a linear regression model to estimate the relation between the value of the house, earnings, education and the lottery prize. Table 2: OLS Estimates coef (s.e) intercept10.0653 (38.0560) earnings 1.0853 (0.4694) education 9.5977 (2.9180) lottery prize 0.4966 (0.1004) The estimate for the error variance is ˆ σ 2 = 8 , 691. Problem SetIV, ARE213 Fall ’04...
View
Full Document
 Fall '07
 Rashidian
 Econometrics, Normal Distribution, Maximum likelihood, Likelihood function, Yi, lottery prize, earnings education lottery

Click to edit the document details