Business Statistics

ECON 2110

Dr. Martin Gritsch

Assignment 6

A reminder about Academic Integrity from the syllabus:

Cheating in its various forms will be severely punished. The minimum penalty is a grade of zero on the assignment in question, but it can go up to expulsion from the university. If you have not done so yet, please familiarize yourself with the “Academic Integrity Policy” (available online at http://www.wpunj.edu/dotAsset/230122.pdf). All parts of that Policy are relevant and important, but for the online setting of the class, I especially would like to stress sections II.B. (on plagiarism) and II.C. (on collusion).

Please make sure that you truly understand what all parts of the policy mean. To name a few examples, working together with another student on an assignment, getting help on an assignment from someone else (e.g., a tutor), and copying another student’s work are all violations of the Academic Integrity Policy.

There is only one question. Points for the individual parts are indicated in parentheses.

The dependent variable in the regression whose output is shown below is annual salary.

There are three independent variables:

“Education” measures the number of years that an individual attended school.

“Female” is a dummy variable that takes on the value 1 if an individual is female and 0 if an individual is male.

“Interaction term” is the interaction between the “education” variable and the “female” dummy.

(I encourage you to review the Chapter 14 Notes for the interpretation of interaction terms.)

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Regression Statistics
Multiple R	0.523077175
R Square	0.273609731
Adjusted R Square	0.250910035
Standard Error	14667.70989
Observations	100
ANOVA
	df	SS	MS	F	Significance F
Regression	3	7779601984	2593200661	12.0534536	9.1727E-07
Residual	96	20653604499	215141713.5
Total	99	28433206483
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	8575.678652	8211.131374	1.044396717	0.298924637	-7723.287904	24874.64521
Education	2156.871766	614.994162	3.507141855	0.000690743	936.1180326	3377.625499
Female	-18767.9211	15546.94099	-1.20717774	0.230329693	-49628.35437	12092.51202
Interaction term	616.9892196	1210.865421	0.509544008	0.611540308	-1786.559584	3020.538024

Note: For parts (a) through (c), ignore the issue of statistical significance of the estimates.

Part (a) (1 point)

Holding education constant, how much higher or lower on average are males’ salaries than females’?

Part (b) (1 point)

What is the average effect of an additional year of education on salary for females?

Part (c) (1 point)

What is the average effect of an additional year of education on salary for males?

Part (d) (1 point)

Are the coefficient estimates of the three independent variables statistically significant? How can you tell?

Part (e) (1 point)

While the “female” estimate is not statistically significant, would you consider it to be of practical significance? Explain your answer.

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