2f what is the correlation coefficient between log

2f) What is the correlation coefficient between log (income ) and prppov ? Is it roughly
what you expected? (Stata command is “corr x y”).

is not even closer to 100% indicates that there is some extra information in percent in
poverty beyond income. In other words, take two neighbourhoods with the same income.
The neighbourhood with a higher proportion in poverty is a more unequal
neighbourhood, with lots of very poor households and lots of very rich households.
2g) Compute the variance inflation factor for prppov in 2e.
= 409
0.0000
0.7955
.03058
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Each answer in problem 2 is worth one point. Two extra points are given for proper
formatting.
Please include all relevant Stata OR R output with your homework.
There is a small bonus (extra 3 points) from including both Stata and R output
(including code) for Problem 2.

12
Appendix 1. Stata code.
* PROBLEM 1
. use "C:\Users\Miana\Dropbox\Teaching\ECON 3740\gpa2.dta", clear
. sum colgpa hsper sat
Variable | Obs Mean Std. Dev. Min Max
-------------+---------------------------------------------------------
colgpa | 4,137 2.652686 .6586347 0 4
hsperc | 4,137 19.23707 16.56873 .1666667 92
sat | 4,137 1030.331 139.4014 470 1540
. reg colgpa hsper sat
Source | SS df MS Number of obs = 4,137
-------------+---------------------------------- F(2, 4134) = 777.92
Model | 490.606706 2 245.303353 Prob > F = 0.0000
Residual | 1303.58897 4,134 .315333567 R-squared = 0.2734
-------------+---------------------------------- Adj R-squared = 0.2731
Total | 1794.19567 4,136 .433799728 Root MSE = .56155
------------------------------------------------------------------------------
colgpa | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
hsperc | -.0135192 .0005495 -24.60 0.000 -.0145965 -.012442
sat | .0014762 .0000653 22.60 0.000 .0013482 .0016043
_cons | 1.391757 .0715424 19.45 0.000 1.251495 1.532018
------------------------------------------------------------------------------
. gen newsat=sat/100
. sum newsat
Variable | Obs Mean Std. Dev. Min Max
-------------+---------------------------------------------------------
newsat | 4,137 10.30331 1.394014 4.7 15.4
. reg colgpa hsper newsat
Source | SS df MS Number of obs = 4,137
-------------+---------------------------------- F(2, 4134) = 777.92
Model | 490.606706 2 245.303353 Prob > F = 0.0000
Residual | 1303.58897 4,134 .315333568