Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Culture” around drinking and driving /historically high rate of drunk driving state o States where people are more tolerant of drunk drinking tend to have more drunk driving o Such states may also be more likely to implement the beer tax, then it will lead to positive bias. • Popularity of teenage drinking o Popularity of teenage drinking means more drunk driving. o States with higher teenage drinking tend to implement higher alcohol taxes. 2 • Any third factors that are positively correlated with both drunk driving and alcohol taxes may lead to a misleading positive correlation between drunk driving and alcohol taxes. 2. GPA and percentage of classes skipped per quarter Observational unit: a student in a quarter • 1000 students, so n = number of entities = 1,000 • 3 quarters, so T = # of time periods = 3 • So total # observations = 1,000*3 = 3,000 Variables: • GPA • percentage of classes skipped /quarter • Other (HS GPA, SAT, male etc) Possible omitted variable bias due to omitted variables that are correlated with both GPA and percentage of classes skipped: • Inherent laziness o Lazy students tend to skipped more classes o Lazy students tend to have lower GPA because of not working hard on learning anyways • Innate ability o If smart students skip few classes, then it is negatively correlated with percent...
View Full Document

This document was uploaded on 03/11/2014.

Ask a homework question - tutors are online