assignment1 - University of California Santa Barbara...

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University of California, Santa Barbara Olivier Deschenes Department of Economics Winter 2011 Economics 140B Individual Assignment 1 Due in class 01/20/11 Some of these exercises are from Stock and Watson. Question 1: Females are shorter and weigh less than males on average. One of your friends, a pre-med student, tells you that in addition, females will weigh less for a given height. To test this hypothesis, you collect height and weight of 29 female and 81 male students at your university. A regression of the weight on a constant, height, and a binary variable, which takes a value of one for females and is zero otherwise, yields the following result: tudentw S ˆ = –229.21 – 6.36 Female + 5.58 Height , R 2 =0.50, SER = 20.99 (43.39) (5.74) (0.62) where Studentw is weight measured in pounds and Height is measured in inches (heteroskedasticity-robust standard errors in parentheses). (a) Interpret the results. Does it make sense to have a negative intercept? (b) You decide that in order to give an interpretation to the intercept you should rescale the height variable. One possibility is to subtract 5 ft. or 60 inches from your Height , because the minimum height in your data set is 62 inches. The resulting new intercept is now 105.58. Can you interpret this number now? What effect do you think the rescaling had on the two slope coefficients and their t -statistic? Do you think that the regression R 2 has changed? What about the standard error of the regression? (c) Use the information contained above to test the null hypothesis that males and females
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This note was uploaded on 09/04/2011 for the course ECON 140b taught by Professor Staff during the Winter '08 term at UCSB.

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assignment1 - University of California Santa Barbara...

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