handout6_1

handout6_1 - Econ 139: Introduction to Econometrics Andrew...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Econ 139: Introduction to Econometrics Andrew Sweeting 1 Department of Economics Duke University Spring 2011 Econ 139 Handout 6 (Duke) Univariate Regression (2) Spring 2011 1 / 30 A Pharmaceutical Testing Example Let&s look at a real world example. Ritalin has been shown to alleviate symptoms of Attention Decit Hyperactivity Disorder (AD/HD) AD/HD & hyperactivity disorder& Ritalin: CIBA-Geigy product; content: methylphenidate Objective is to determine if Ritalin can alleviate symptoms of Central Auditory Processing Disorder (CAPD) Why do we think it might? CAPD has symptoms similar to AD/HD In fact, children often have both (or are misdiagnosed as having one when they actually have the other). 1 1 Further information may be found at http://kidshealth.org/ Econ 139 Handout 6 (Duke) Univariate Regression (2) Spring 2011 2 / 30 Ritalin Example: Experiment So how do we test the e/ectiveness of Ritalin on CAPD? Suppose we do an experiment: 1 Select 64 children who su/er from CAPD 2 Have all children take the same auditory test 3 Give 32 children (treatment group) some dosage of Ritalin 4 Give 32 children (control group) a placebo (i.e. no drug) 5 Have all 64 children retake the auditory test Econ 139 Handout 6 (Duke) Univariate Regression (2) Spring 2011 3 30 Ritalin Example: Data DOSAGE i denotes the dosage of Ritalin received by child i Range = 0 to 0 . 7 mg kg IMPROVE i = (child i &s score on 2 nd test - child i &s score on 1 st test) Range = & 20 to 50 Here are the results displayed in a graph: Econ 139 Handout 6 (Duke) Univariate Regression (2) Spring 2011 4 / 30 Ritalin Example: Regression Results Following our OLS methodology, we assume the average relationship between IMPROVE i and DOSAGE i is linear IMPROVE i = + 1 DOSAGE i + u i Estimating this model using our data, here is what you obtain: or \ IMPROVE = . 23 + 12 . 18 & DOSAGE Econ 139 Handout 6 (Duke) Univariate Regression (2) Spring 2011 5 / 30 Ritalin Example: Interpretation So how do we interpret 1 ? For an additional 1 unit & mg kg increase in Dosage, Improve increases by 12.18. More appropriately: for an additional 0.1 mg kg increase in Dosage, we expect Improve to increase by 1.218. But does this tell us that Ritalin has a signi&cant impact on CAPD? What does signi&cant mean? We need to perform a hypothesis test, and to do this, we need to know SE ( b 1 ) (then it will be easy). So we need to derive the distribution of the b &s. But rst, are the b &s unbiased? Let&s prove that they are. Econ 139 Handout 6 (Duke) Univariate Regression (2) Spring 2011 6 / 30 Sampling Distribution of the OLS Estimators OLS is unbiased Now it&s time to do some signicant algebra: we& ll take it slowly!...
View Full Document

This note was uploaded on 08/02/2011 for the course ECON 139 taught by Professor Alessandrotarozzi during the Spring '08 term at Duke.

Page1 / 30

handout6_1 - Econ 139: Introduction to Econometrics Andrew...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online