# Econometrics Case 3.8 Wooldridge

Topics: Standard deviation, Regression analysis, Skewness Pages: 4 (891 words) Published: April 15, 2011
4) [Wooldridge C3.8]
(i)

Wiew/Descriptive statistics

INCOMEPRPBLCK
Mean 47053.78 0.113486
Median 46272.00 0.041444
Maximum 136529.0 0.981658
Minimum 15919.00 0.000000
Std. Dev. 13179.29 0.182416
Skewness 0.962831 2.700012
Kurtosis 7.551386 10.56841

Jarque-Bera 416.2135 1473.100
Probability 0.000000 0.000000

Sum 19244998 46.41594
Sum Sq. Dev. 7.09E+10 13.57651

Observations 409 409

The average of prpblck is .113 with standard deviation .182; the average of income is 47,053.78 with standard deviation 13,179.29. It is evident that prpblck is a proportion and that income is measured in dollars.

(ii)

Dependent Variable: PSODA
Method: Least Squares
Sample: 1 410
Included observations: 401
Excluded observations: 9
VariableCoefficientStd. Errort-StatisticProb.
PRPBLCK0.1149880.0260014.4225150.0000
INCOME1.60E-063.62E-074.4301300.0000
C0.9563200.01899250.353790.0000
R-squared0.064220 Mean dependent var1.044863
S.E. of regression0.086115 Akaike info criterion-2.058820 Sum squared resid2.951465 Schwarz criterion-2.028940
Log likelihood415.7934 F-statistic13.65691
Durbin-Watson stat1.696180 Prob(F-statistic)0.000002

If, say, prpblck increases by .10 (ten percentage points), the price of soda is estimated to increase by .0115 dollars, or about 1.2 cents, holding income constant. While this does not seem large, there are communities with no black population and others that are almost all black, in which case the difference in psoda is estimated to be almost 11.5 cents. I’d still say it’s pretty weak effect, but it’s not totally negligible, given that the price of soda is pretty low.

(iii)

Dependent Variable: PSODA
Method: Least Squares
Sample: 1 410
Included observations: 401
Excluded observations: 9
VariableCoefficientStd. Errort-StatisticProb.
PRPBLCK...