Question

1. A sample consists of 1,388 observations, where the unit of observation is an individual. packsi is the number of packs of cigarettes woman i smoked per day while pregnant, and bwghti is the birth weight (in ounces) of the woman’s child. Given the information found in the attached STATA output,

(a) The population model implied by the regression output is

(b) The (population) parameter of interest is

(c) The estimate of the parameter of interest is

(d) Interpret the estimate

(e) In the space below, provide a variable that could possibly affect your dependent variable, but was not accounted for in the simple linear regression model (i.e. is in the u term). Make sure to clearly define your variable and briefly explain why you believe it affects your dependent variable.

Saturday January 19 13:20:33 2019 Page 1 Statistics/Data Analysl -_1 /-/ //-, 10.1 Copyright 1984-2009 Statistics/Data Analyais - StataCorp 905 Lakeway Drive College Station, Texas 77845 USA 00-STATA PC 979-696-4600 79-696-4601 (fax) - Special Edition htt stata stata.com www.stata.com Single-user Stata for Windows perpetual 1icense Serial number: Licensed to: Pierre Brochu University of Ottava Notes 1. /mil option or -set memory- 10.00 MB allocated to data (/v# option or -eet maxvar-) 5000 maximum variables 1useC:Data Hooldridge BHGHT.DTA, cleaz 2 keep packs bught 3gen 1packs-1n (packs) (1176 missing values generated) 4gen 1bwght-1nt bught) sreg lbwght packs Source dt Number of obs1388 F 1. 1386)27.98 Prob F R-squared Adj R-squared0.0191 Root MSE MS Model Residual 1997781141 9.42255251386 035658407 997781141 0.0000 0.0198 Total50.4203336 1387 .036352079 .18883 1bwght Coef. Std. Err. [95% Conf. Interval] packs 0898131 .0169786-5.29 0.000 -.1231197-,O565065 .779937 cons .7694040053694 88.26 0.000 .758871

Answer 1

1. The population regression function from the given information would be

$bwght=\beta_{1} +\beta_{2}*packs+u$

where birthweight is the dependent variable and packs is independent variable and both variables are in logs.

2. The parameter of interest is the slope of packs as the constant term mostly does not have economic interpretation.

3. The estimate of the slope of packs as from the given regression results is -0.0898131.

4. The interpretation of the slope where the regression is a log-log function then slope represents elasticity .i.e. when the number of packs of cigarettes woman smoked per day increases by 1%, ceteris paribus then the birthweight of the woman's child decreases by 0.898%.