EMET2007 Lecture 9 for Wattle

Outcome lecture 9 qualitative variables emet20076007 8

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Unformatted text preview: elated to other factors a¤ecting the outcome. Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 50 / 53 Further example of an endogenous dummy regressor Are nonwhite customers discriminated against? The dependent variable is: approved = Dummy indicating whether loan was approved (1 = approved, 0 = not approved) The explanatory variables include: nonwhite = 1 Race dummy, = 0 if white credrate = Credit rating It is important to control for other characteristics that may be important for loan approval (e.g. profession, unemployment) Omitting important characteristics that are correlated with the non-white dummy will produce spurious evidence for discriminiation Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 51 / 53 I will be in Austria and Romania next week so there will be no lecture next week. Tutorials will proceed as usual: i.e., there will be tutorials next week, and the week after, and the week after ... Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 52 / 53 In this lecture we have covered ... Qualitative, categorical and ordinal independent and dependent variables The magic of the dummy variable The dummy variable trap and not including a constant Dummy variables giving intercept shifts Dummy variables and log dependent variables Interacting dummies Dummies and Ordinal variables Dummy variables giving slope shifts (interacting dummies and normal variables) Binary dependent variables and the linear probability model Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 53 / 53...
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