Intro Econometrics

Intro Econometrics
1. (15 points total. 5 parts worth 3 points each.) With this assignment you will find an Excel file called HW4.olympics.xls. For reference, the variables in this file include:

Variable name/descriptions
medals = Total number of medals won
population = Population of country (in 100,000)
GDP = Per capita gross domestic product, in $10,000 U.S. dollars
a. Run the following regression: medals = ß0 + ß1*population

b. What is the interpretation of the coefficient on population? (Be specific using the number shown in the STATA output and in units of variable description above)

c. Hypothesize the sign of the bias, if any, resulting from excluding GDP from the regression. Explain your reasoning.

d. Use STATA to verify (or not) your claim from c). Do this by comparing a model that compares a “complete” model and a model that omits GDP. What does this say about the sign of the bias? What is the magnitude of the bias?

e. Now find the magnitude and sign of the bias using the formula for bias that we discussed in class. Break down the bias into the component pieces (as we did in class) using actual numbers. Highlight any commands that you use in STATA.

2. (15 points total.) With this assignment you will find an Excel file called HW4.trafficdeaths.xls. For reference, the variables in this file include:

numberofdeaths = Number of traffic deaths
total_miles_driven = Total miles driven within a state for that year (in millions of miles)
cell_ban = 1 if it is illegal to operate a handheld cell phone while driving and 0 otherwise

a. Run the following regression: numberofdeaths = ß0 + ß1*total_miles_driven
What is the relationship between number of miles driven and number of deaths? Why does this make sense? (2 points)

b. Now, run the following regression: numberofdeaths = ß0 + ß1*total_miles_driven+ ß2*cell_ban. What is the estimated regression equation? (2 points)
c. Using the model you calculated, draw two curves that show the relationship between number of deaths and total miles driven for both states with the driving cell phone ban and those without the cell phone ban. The graph does not need to be drawn to scale; just be sure to label the y-intercepts, the slopes, and which curve represents a state with a cell phone ban and a state without a cell phone ban: (3 points)
d. Based on the results from part (b), how many lives would be saved if California banned cell phone use while driving? How many lives would be saved if Wyoming had such a ban? Show your work: (3 points)

CALIFORNIA:

WYOMING:

e. One problem with the above model is that it does not allow the effect of the cell phone ban to vary depending on a state’s total miles driven. Estimate a model in which total miles driven is interacted with the cell phone ban. Write down the new estimated regression model: (2 points)

f. Using the model from e), what is the estimated effect of a cell phone ban for California? For Wyoming? Show your work: (3 points)

CALIFORNIA:

WYOMING:
country medals population GDP
China 9 1350.695 0.2069
India 0 1236.686732 0.083
United States 28 313.91404 4.6444
Brazil 0 198.656019 0.5788
Pakistan 0 179.160111 0.0853
Russia 33 143.533 0.6947
Japan 8 127.561489 3.4102
Mexico 0 120.847477 0.8618
Phillippines 0 96.706764 0.1399
Ethiopia 0 91.728849 0.0192
Egypt 0 80.721874 0.1473
Germany 19 80.425823 3.5238
Iran 0 76.424443 0.314
Turkey 0 73.997128 0.7736
Thailand 0 66.785001 0.3143
France 15 65.696689 3.5457
Great Britain 4 63.612729 4.082
Italy 8 59.539717 3.1777
South Africa 0 52.274945 0.5407
South Korea 8 50.004441 1.9676
Colombia 0 47.704427 0.3713
Spain 0 46.761264 2.7847
Ukraine 2 45.5933 0.2303
Kenya 0 43.178141 0.0612
Argentina 0 41.086927 0.549
Poland 6 38.535873 0.8958
Algeria 0 38.481705 0.3391
Canada 25 34.754312 3.9257
Morocco 0 32.521143 0.2128
Peru 0 29.9878 0.3298
Venezuela 0 29.954782 0.6748
Uzbekistan 0 29.7745 0.0643
Nepal 0 27.474377 0.0353
Ghana 0 25.366462 0.093
Australia 3 22.722 3.6113
Madegascar 0 22.293914 0.0293
Cameroon 0 21.699631 0.0965
Romania 0 20.076727 0.5789
Chile 0 17.464814 0.9371
Kazakhstan 1 16.791425 0.5292
Netherlands 24 16.754962 4.1459
Senegal 0 13.726021 0.0808
Zimbabwe 0 13.724317 0.0428
Belgium 0 11.128246 3.7919
Greece 0 11.092771 2.3475
Portugal 0 10.514844 1.9177
Czech Republic 8 10.510785 1.4488
Bolivia 0 10.496285 0.1203
Hungary 0 9.920362 1.1174
Sweden 15 9.519374 4.3949
Belarus 6 9.464 0.3849
Azerbaijan 0 9.295784 0.2473
Austria 17 8.429991 3.93
Tajikistan 0 8.00899 0.0407
Switzerland 11 7.996861 5.414
Honduras 0 7.935846 0.1541
Israel 0 7.9105 2.1405
Bulgaria 0 7.305888 0.4313
Serbia 0 7.223887 0.3943
Hong Kong 0 7.1546 2.8224
Paraguay 0 6.687361 0.1773
Togo 0 6.642928 0.0387
Kyrgyzstan 0 5.6072 0.0543
Denmark 0 5.591572 5.0462
Finland 5 5.413971 3.9487
Slovakia 1 5.407579 1.2842
Norway 26 5.018573 7.296
Costa Rica 0 4.805295 0.5128
Ireland 0 4.586897 5.2119
Georgia 0 4.4907 0.1765
New Zealand 0 4.4331 2.636
Lebanon 0 4.424888 0.55
Croatia 1 4.2676 1.1229
Bosnia and Herzegovina 0 3.833916 0.32
Puerto Rico 0 3.667084 2.2642
Moldova 0 3.559519 0.0951
Uruguay 0 3.395253 0.5879
Albania 0 3.162083 0.2872
Lithuania 0 2.987773 0.9202
Armenia 0 2.969081 0.2126
Mongolia 0 2.796484 0.1334
Jamaica 0 2.707805 0.4487
Macedonia 0 2.105575 0.3133
Slovenia 8 2.057159 1.9406
Latvia 4 2.034319 0.8986
Trinidad and Tobago 0 1.337439 1.4163
Estonia 0 1.329301 1.2487
Swaziland 0 1.230985 0.2636
Timor-Leste 0 1.210233 0.0456
Cyprus 0 1.128994 2.3864
Fiji 0 0.874742 0.3747
Montenegro 0 0.621081 0.4371
Luxembourg 0 0.530946 9.0016
Malta 0 0.419455 1.5766
Iceland 0 0.320716 5.4814
Tonga 0 0.104941 0.2913
Andorra 0 0.07836 3.4485
Dominica 0 0.071684 0.5408
Bermuda 0 0.064806 8.3913
Monaco 0 0.037579 13.5689
Liechtenstein 0 0.036656 11.3874
San Marino 0 0.031247 4.8758
year state state_numeric population numberofdeaths urban_percent cell_subscription cell_ban text_ban total_miles_driven
2012 Alabama 1 4822023 865 35 4549 0 0 64959.17207
2012 Alaska 2 731449 59 21 649 0 1 4792.081999
2012 Arizona 3 6553255 825 45 5774 0 0 60129.35825
2012 Arkansas 4 2949131 552 19 2963 0 1 33522.13681
2012 California 5 38041430 2857 48 35616 1 1 326271.6506
2012 Colorado 6 5187582 472 39 4878 0 1 46768.77109
2012 Connecticut 7 3590347 236 63 3418 1 1 31269.36372
2012 Delaware 8 917092 114 36 903 1 1 9185.73807
2012 Florida 10 19317568 2424 57 18369 0 0 191373.7705
2012 Georgia 11 9919945 1192 45 10054 0 1 107488.4972
2012 Hawaii 12 1392313 126 40 1339 0 0 10049.66346
2012 Idaho 13 1595728 184 15 1363 0 0 16314.57164
2012 Illinois 14 12875255 956 53 12859 0 1 104578.407
2012 Indiana 15 6537334 779 26 5786 0 1 78922.58
2012 Iowa 16 3074186 365 17 2777 0 1 31596.24047
2012 Kansas 17 2885905 405 15 2696 0 1 30572.47519
2012 Kentucky 18 4380415 746 16 3976 0 1 47343.94452
2012 Louisiana 19 4601893 722 46 4898 0 1 46889.04026
2012 Maine 20 1329192 164 0 1204 0 1 14198.8263
2012 Maryland 21 5884563 505 60 6116 1 1 56475.58826
2012 Massachusetts 22 6646144 349 82 6703 0 1 55939.71675
2012 Michigan 23 9883360 938 50 9598 0 1 94547.98654
2012 Minnesota 24 5379139 395 27 5154 0 1 56988.31803
2012 Mississippi 25 2984926 582 28 2656 0 0 38667.12981
2012 Missouri 26 6021988 826 38 5668 0 0 68503.68445
2012 Montana 27 1005141 205 6 888 0 0 11885.12375
2012 Nebraska 28 1855525 212 21 1675 0 1 19276.55085
2012 Nevada 29 2758931 258 61 2611 1 1 24148.28844
2012 New Hampshire 30 1320718 108 43 1225 1 1 12893.65174
2012 New Jersey 31 8864590 589 84 9015 1 1 74225.3757
2012 New Mexico 32 2085538 365 20 1737 0 0 25561.64959
2012 New York 33 19570261 1168 34 20715 1 1 128220.5631
2012 North Carolina 34 9752073 1292 25 8985 0 1 104949.9412
2012 North Dakota 35 699628 170 11 683 0 1 10081.49157
2012 Ohio 36 11544225 1123 38 11549 0 0 112715.1131
2012 Oklahoma 37 3814820 708 28 3940 0 0 47871.81167
2012 Oregon 38 3899353 336 22 3519 1 1 33172.93743
2012 Pennsylvania 39 12763536 1310 41 11956 0 0 98884.38578
2012 Rhode Island 40 1050292 64 82 1032 0 1 7806.872883
2012 South Carolina 41 4723723 863 10 4325 0 0 49036.19029
2012 South Dakota 42 833354 133 9 750 0 0 9113.47146
2012 Tennessee 43 6456243 1014 39 6484 0 1 71166.87119
2012 Texas 44 26059203 3398 43 24553 0 0 237835.8227
2012 Utah 45 2855287 217 47 2409 0 1 26527.83436
2012 Vermont 46 626011 77 12 518 0 1 7215.657792
2012 Virginia 47 8185867 777 47 7900 0 1 80958.66779
2012 Washington 48 6897012 444 30 6424 1 1 56762.00621
2012 West Virginia 49 1855413 339 22 1598 0 0 19225.78561
2012 Wisconsin 50 5726398 615 33 5037 0 1 59087.29989
2012 Wyoming 51 576412 123 12 545 0 1 9270.993558

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