36 theaveragemvateis073

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Unformatted text preview: match rate, mrate. This variable gives the average amount the firm contributes to each worker’s plan for each $1 contribution by the worker. For example, if mrate = 0.50, then a $1 contribution by the worker is matched by a 50¢ contribution by the firm. (i) Find the average participation rate and the average match rate in the sample of plans. ­ the average prate is 87.36% ­ the average mvate is 0.73 ︿ (ii) Now, estimate the simple regression equation ︿ ︿ prate = β0 + β1mrate, ︿ and report the results along with the sample size and R­squared. ­ prate = 83.05 + 5.86mrate; n = 1534 ; R2 = 0.07 ︿ (iii) Interpret the intercept in your equation. Interpret the coefficient on mrate. ­ intercept: if mrate = 0, prate = 83.08%. That is 83.08% of the workers have an active account when the employers do not contribute. ­ slope: if mrate increases by $1 then prate increases by 5.86% (iv) Find the predicted prate when mrate 5 3.5. Is this a reasonable prediction? Explain what is happening here. ︿ ­ prate = 83.08 + 5.86 * 3.5 = 103.59% ­ No since the predicted value is greater than 100% (v...
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