Econ 230  Homework 2
1. Let
kids
denote the number of children ever born to a woman, and let
educ
denote years of
educations for the woman. A simple model relating fertility to years of education is:
kids
=
β
0
+
β
1
educ
+
u,
where
u
is the unobserved error.
(i) What kind of factors are contained in
u
? Are these likely to be correlated with level edu
cation?
(ii) Will a simple regression analysis uncover the ceteris paribus eﬀect of education of fertility?
Explain.
2. The data set BWGHT.RAW contains data on births of women in the United States. Two
variables of interest are the dependent variable, infant birth weight in ounces (
bwght
), and an
explanatory variable, average number of cigarettes the mother smoked per day during pregnancy
(
cigs
). The following simple regression was estimated using data on
n
= 1388 births:
ˆ
bwght
= 119
.
77

0
.
514
cigs
(i) What is the predicted birth weight when
cigs
= 0? What about when
cigs
= 20 (one pack per
day)? Comment on the diﬀerence.
(ii) Does this simple regression necessarily capture a causal relationship between the child’s birth
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 Spring '10
 PM
 Statistics, Econometrics, Regression Analysis, CEO.

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