Lecture 14 - May 6 13 What causes economic inequality Word...

May 6, 13
What causes economic inequality?
Word of the Day
 Probity
o “The quality or condition of having strong moral principles; integrity, good
character; honesty, decency”
Measuring IQ in The Bell Curve
 Hernnstein and Murray use AFQT (armed forces qualifying test) scores to
measure intelligence
o The questions aren’t too hard but there’s definitely an aspect of school
achievement rather than innate intelligence (you can definitely do better if
you learned a lot in school)
 AFQT scores are converted into Z-scores to facilitate comparison; they are
standardized
o A number that ranges roughly from -3 to 3 and it represents how many
standard deviations a particular score is above or below the mean
Measuring socioeconomic status
 Hernnstein and Murray measure SES by constructing a SES index comprised of
four variables (each weighted equally, resulting score standardized):
o Mother’s education
o Father’s education
o Parental occupation
o Family income
 To assess the relative influence of intelligence and SES on the probability that a
NLSY respondents would be poor, Hernnstein and Murray use a method of
statistical analysis called logistic regression
o The dependent variable in a logistic regression is a binary variable, unlike
OLS regression, where the dependent variable is continuous
 Dependent variable in this particular analysis is whether a respondent reported a
household income that was below the poverty line in 1989
Types of variables
 Continuous variables : can take on a large range of values
o E.g. income or age. Are measured on an interval scale
o Is used in orderly squares regression (ex: Y = AX + B)
 Categorical variables : can take on only a limited number of values. E.g.