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Homework 3

# Homework 3 - Homework 3 Total marks 10 Qs 3 Use the data in...

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Homework 3 Total marks: 10 Qs 3) Use the data in MEAP93.dta to answer the following: i. Estimate a multiple model regressing math10 on log(expend) and lnchprg. Are the slope coefficients what you expected? (1) ii. What do you make of the intercept you have estimated? Does it make sense to set the two explanatory variables to zero? [Hint: recall that log(1) = 0] (1.5) iii. Now run the simple regression of math10 on log(expend) and compare the slope coefficient with the estimate obtained in part (i). Is the estimated spending effect larger or smaller than in part (i)? (1) Solution: i) Command: reg math10 lexpend lnchprg math10 | Coef. Std. Err. t P>|t| [95% Conf. Interval] -------------+---------------------------------------------------------------- lexpend | 6.229683 2.972634 2.10 0.037 .3859641 12.0734 lnchprg | -.3045853 .0353574 -8.61 0.000 -.3740923 -.2350784 _cons | -20.36069 25.07287 -0.81 0.417 -69.64992 28.92853 The signs of the estimated slopes imply that more spending increases the pass rate (holding lnchprg fixed) and a higher poverty rate (proxied well by lnchprg) decreases the pass rate (holding spending fixed). These are what we expect

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