PS2_answers.pdf - ECON 4650-001 Principles of Econometrics Problem set 2 Answer key Spring 2020 Marcio Santetti 1 Suppose that you are asked to conduct

# PS2_answers.pdf - ECON 4650-001 Principles of Econometrics...

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ECON 4650-001 Principles of EconometricsSpring 2020Problem set 2 - Answer keyMarcio Santetti1.Suppose that you are asked to conduct a study to determine whether smaller class sizes lead to improvedstudent performance of fourth graders.(a) If you could conduct any experiment you want, what would you do? Be specific.Answer: Answers may vary here, ranging from simply collecting data on a single classroom to complexexperimental methods.Provided one can do any experiment, an interesting approach could be having"baseline" classrooms of different sizes, say, one with 10 and another with 30 students. They could serveascontrolgroups, meaning that they would not be subject to any study. Then, another two classrooms,also with sizes 10 and 30, could serve astreatmentgroups. These latter two groups would be subject topedagogical techniques that can be sensitive to class size, such as small group discussions, presentations,and computer exercises, for example. Finally, by the end of a period of, for instance, 6 months, one couldcompare the effects of tests performance between the two different groups. However, such experiment is hardin large scale, so we need to look for more feasible estimation methods.(b)More realistically, suppose you can collect observational data on several thousand fourth graders in agiven state. You can obtain the size of their fourth-grade class and a standardized test score taken atthe end of fourth grade. Why might you expect a negative correlation between class size and test score?

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• Statistics, Standardized test, Correlation does not imply causation

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