Question 1:

Use the data in WAGE1 for this exercise.

(i) Find the average education level in the sample. What are the lowest and highest years of
education?
(ii) Find the average hourly wage in the sample. Does it seem high or low?
(iii) The wage data are reported in 1976 dollars. Using the Internet or a printed source, find
the Consumer Price Index (CPI) for the years 1976 and 2013.
(iv) Use the CPI values from part (iii) to find the average hourly wage in 2013 dollars.
(v) How many women are in the sample? How many men?
Question 2:

The data in MEAP01 are for the state of Michigan in the year 2001. Use these data to answer
the following questions.
(i) Find the largest and smallest values of math4. Does the range make sense? Explain.
(ii) How many schools have a perfect pass rate on the math test? What percentage is this of
the total sample?
(iii) How many schools have math pass rates of exactly 50%?
(iv) Compare the average pass rates for the math and reading scores. Which test is harder to
pass?
(v) Find the correlation between math4 and read4. What do you conclude?
(vi) The variable exppp is expenditure per pupil. Find the average of exppp along with its
standard deviation. Would you say there is wide variation in per pupil spending?
Question 3:

Vietnam bank performance

i. Select data on these variables, label these variables with their definitions and unit
measurements, and then report their descriptive statistics including mean, median,
variance, standard deviation, skewness and kurtosis.
ii. Calculate the correlation matrix. What conclusion can you draw by examining the
correlation in each independent variable?
Question 4

Use the data in SLEEP75 from Biddle and Hamermesh (1990) to study whether there is a
tradeoff between the time spent sleeping per week and the time spent in paid work. We
could use either variable as the dependent variable. For concreteness, estimate the model
 sleep=β 0 + β 1 totwrk +uwhere sleep is minutes spent sleeping at night per week and totwrk
is total minutes worked during the week.

(i) Report your results in equation form along with the number of observations and R2.
What does the intercept in this equation mean?

(ii) If totwrk increases by 2 hours, by how much is sleep estimated to fall? Do you find this
to be a large effect?

(iii) Let totwrk_hr be the total hours worked during the week. Without using the computer,
what will be the coefficient of this variable in a regression of sleep on totwrk_hr?

2) A more realistic version of this model is: sleep  0  1 totwork  2 educ  3age 
u , where sleep and totwrk (total work) are measured in minutes per week and educ and
age are measured in years.

(i) If adults trade off sleep for work, what is the sign of 1 ?

(ii) What signs do you think  2 and 3 will have?

(iii) Using the data in SLEEP75.RAW, estimate the equation above. Write down the
equation with the found coefficients, the R 2 , and the number of observations.

(iv) If someone works five more hours per week, by how many minutes is sleep predicted
to fall? Is this a large tradeoff? Compare these results with the results you had in the first
exercise.

(v) Discuss the sign and magnitude of the estimated coefficient on educ.

(vi) Would you say totwrk, educ, and age explain much of the variation in sleep? What
other factors might affect the time spent sleeping? Are these likely to be correlated with
totwrk?

Question 5
The data set BWGHT.dta contains data on births to women in the United States. Two
variables of interest are the dependent variable, infant birth weight in ounces (bwght), and
an explanatory variable, average number of cigarettes the mother smoked per day during
pregnancy (cigs). The following simple regression was estimated using data on n=1,388
births:

^
bwght =119.77−0.514 cigs
 i. What is the predicted birth weight when cigs = 0? What about when cigs=20 (one
pack per day)? Comment on the difference.
ii. Does this simple regression necessarily capture a causal relationship between the
child’s birth weight and the mother’s smoking habits? Explain.
iii. To predict a birth weight of 125 ounces, what would cigs have to be? Comment.
iv. The proportion of women in the sample who do not smoke while pregnant is
about .85. Does this help reconcile your finding from part (iii)?

Question 6
Use the data in WAGE2.RAW to estimate a simple regression explaining monthly salary
(wage) in terms of IQ score (IQ).

i. Find the average salary and average IQ in the sample. What is the sample standard
deviation of IQ? (IQ scores are standardized so that the average in the population is
100 with a standard deviation equal to 15.)
ii. Estimate a simple regression model where a one-point increase in IQ changes wage
by a constant dollar amount. Use this model to find the predicted increase in wage for
an increase in IQ of 15 points. Does IQ explain most of the variation in wage?
iii. Now, estimate a model where each one-point increase in IQ has the same percentage
effect on wage. If IQ increases by 15 points, what is the approximate percentage
increase in predicted wage?

Question 7
The data set in CEOSAL2 contains information on chief executive officers for U.S.
corporations. The variable salary is annual compensation, in thousands of dollars, and
ceoten is prior number of years as company CEO.
(i) Find the average salary and the average tenure in the sample.
(ii) How many CEOs are in their first year as CEO (that is, ceoten = 0)? What is the
longest tenure as a CEO?
(iii) Estimate the simple regression model
log ⁡(salary )=β 0 + β 1 ceoten+uand report your results in the usual form. What is the
(approximate) predicted percentage
increase in salary given one more year as a CEO?