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Unformatted text preview: Department of Economics W3412 Columbia University Spring 2010 SOLUTION TO Problem Set 7 Introduction to Econometrics Prof. Marcelo J. Moreira and Seyhan E Arkonac, PhD for all sections Spring 2010 Question I: 10.1 (a) Yes. The tstatistic for the coefficient on Experience is 0.031/0.009 = 3.44 > 2.58, so it is sign t the 1% level. ificant a (b) 0.712 + 0.03110 = 1.022; (1.022) = 0.847 = = (c) = 0.712 + 0.0310 = 0.712; = (0.712)=0.762 (d) = 0.712 + 0.03180 = 3.192; = (3.192) = 0.999. This is unlikely to be accurate because the sample did not include anyone with more than 40 years of driving experience. 10.2 (a) Yes. The tstatistic for the coefficient on Experience is 0.040/0.016 = 2.5 > 1.96, so it is nificant the 5% level. sig at 1 exp 1.059 0.040 10 1 exp 1.459 0.811 1 1 1 1 exp 1.059 0.040 0 1 1 exp 1.059 0.742 (b) The shapes of the regression functions are similar, but the logit regression lies below the probit regression for experience in the range of 0 to 60 years. 10.3 (a) The tstatistic for the coefficient on Experience is 0.006/0.002 = 3 > 2.58, so it is significant evel. at the 1% l 0.774 + 0.006 10 = 0.836 = = 0.774 + 0.006 0 = 0.774 (d) The probabilities are similar except when Experience gets large (>40 years). In this case the LPM model produces nonsensical results (probabilities greater than 1.0). 10.4 (a) (b) Because there is only one regressor and it is a binary (Male), estimates for each model show the fraction of males and females passing the test. Thus, the results are identical for all models. 10.5 (a) = (0.806 + 0.041 10 0.174 1 0.015 1 10) = 0.814 (b) = (0.806 + 0.041 2 0.174 0 0.015 0 2) = 0.813 (c) No. The tstat on the interaction term is 0.015/0.019 = 0.79. Since 0.79 < 1.64, it is not significant at the 10% level. Question II: Some U.S. states have enacted laws that allow citizens to carry concealed weapons. These laws are known as shallissue laws because they instruct local authorities to issue a concealed weapons permit to all applicants who are citizens, mentally competent, and have not been convicted of a felony (some states have some additional restrictions). Proponents argue that, if more people carry concealed weapons, crime will decline because criminals are deterred....
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 Fall '11
 SeyhanArkonac
 Econometrics

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