Multiple Regression Analysis Using Dummy Variable

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MULTIPLE REGRESSION ANALYSIS USING DUMMY VARIABLE
HDI Regression Using Health, Education &Income

3/21/2012
Department Of Business Economics
Jasmine Kaur(598)
Kshama (577)
Maanya Kaushik
ShikhaChaurasia(600)

ABSTRACT In this project we have employed tools of empirical econometric analysis to examine the relationship between the Human Development Index and the indicators of Human Development.

Table of contents
Topics| Page no:|
1.Abstract | (i)|
2. Literature Review | |
3. Theory 3.1 Data 3.2 Dummy Variable 3.3 Regression3.4 Interpretation| | 4. Hypothesis testing| |

LITERATURE REVIEW
Human development plays a fundamental role and remains the most important factor in Economic growth and development in countries of the world. The Human Development Index (HDI), first introduced in the 1990 Human Development Report (UNDP: 1990), was in response to the need for a measure that could better represent human achievements in several basic capabilities. This a composite statistic used to rank countries by level of “human development” and to separate countries into developed (high development), developing (middle development), and underdevelopment (low development) categories. The statistic is computed using data on Life Expectancy, Education and Per Capita GDP, each as an indicator of Standard of Living. Human Development is a development paradigm that is of more significance than the rise or fall of National Incomes. It is about creating an environment in which people can develop their full potential and lead productive and creative lives in accord with their needs and interests. People are the real wealth of nations. Development is thus about expanding the choices people have to lead lives that they value. Therefore, much more than economic growth which is only means of enlarging people’s choice. Human development is related to economics and standards of living. The Human Development Index uses different measurements of a population, namely * Life expectancy at birth. This is used to see how healthy people are. It assumes that healthier people live longer, on average. * Literacy is used to look at how educated people are. This is weighted, two thirds are contributed by the adult literacy rate, that is, how many adults can read and write. One third of this is the gross enrollment ratio, which measures how many of children of schooling age attend school. * Standard of living. This is measured by taking the gross domestic product and normalizing it taking the total population into account.

DATA
Data used in the regression analysis:
The data taken is a time series data. It is taken from the year 2001 to 2010.

HDI Value – It is measured by taking the three parameters- health, education and income into account. The value of the HDI is ranging from 0 to 1.

Health – The health is measured by the Life expectancy at birth. The life expectancy is measured in Years. Education – We have measured education by the adult literacy rate in percentage terms. The literacy rate shows the number of people educated in a country per thousand. Income – It is measured by Gross Domestic Product (GDP) per capita income which has been taken in $.

Year| HDI value| Life Expectancy(Years)| Literacy Rate(%)| GDP Per Capita($)| Growth Rate(Dummy)| 2001| 0.577| 63.3| 57.2| 2358| 5.8|
2002| 0.606| 68.1| 58| 2840| 4|
2003| 0.595| 63.7| 65.4| 2670| 8.5|
2004| 0.611| 63| 67.3| 3100| 7.5|
2005| 0.602| 63.2| 65.6| 2892| 9.5|
2006| 0.609| 63.3| 63.6| 3800| 9.6|
2007| 0.612| 63.4| 62.6| 2753| 9.3|
2008| 0.619| 63.7| 64| 3452| 6.8|
2009| 0.609| 66| 66.2| 3200| 8|
2010| 0.519| 64.4| 69.6| 3337| 8.5|

Table-1

DUMMY VARIABLE

The dummy variable that we have taken is Economic stability. This qualitative variable is measured by...
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