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Unformatted text preview: ANSWERS TO PROBLEM SET 3 3.4 (i) A larger rank for a law school means that the school has less prestige; this lowers starting salaries. For example, a rank of 100 means there are 99 schools thought to be better. (ii) > 0, > 0. Both LSAT and GPA are measures of the quality of the entering class. No matter where better students attend law school, we expect them to earn more, on average. , > 0. The number of volumes in the law library and the tuition cost are both measures of the school quality. (Cost is less obvious than library volumes, but should reflect quality of the faculty, physical plant, and so on.) (iii) This is just the coefficient on GPA , multiplied by 100: 24.8%. (iv) This is an elasticity: a one percent increase in library volumes implies a .095% increase in predicted median starting salary, other things equal. (v) It is definitely better to attend a law school with a lower rank. If law school A has a ranking 20 less than law school B, the predicted difference in starting salary is 100(.0033)(20) = ranking 20 less than law school B, the predicted difference in starting salary is 100(....
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This note was uploaded on 10/25/2010 for the course ECO Economics taught by Professor Hammermesh during the Fall '10 term at University of Texas at Austin.
- Fall '10