Note that the set seed and sample commands will take a random 95% subsample of the data that is different for every student. For this reason, the numbers that you get with your output will not be the same for any two students. Be mindful of this if you are comparing your work with your peers.

Submission

You are required to submit three documents:

a) A report containing your answers to all the questions. I outline below how I would like your report to look. The overall goal is that the answers to each question must be easily identifiable in a readable, professional-looking document. Submit to Gradescope. You will receive a 10% penalty if you fail to submit to Gradescope.

b) Stata dofile. Submit electronically using the dropbox in mylearningspace.

c) Stata log file. Submit electronically using the dropbox in mylearningspace.

In the report described in (a) above, please answer all questions in the same order as they are stated on the question sheet. For each question and sub-question, include the relevant Stata code (if any) that you used, the output generated by that command if there was any, and an interpretation if you are asked to provide it. For example, if you were answering the following hypothetical question, it might look like this:

************************************************************************************

1) Locate the variable y

a. Using the tab command, provide a frequency distribution for y Stata commands:

tab y;

Output:

y | Freq. Percent Cum.

  + 

  +  Total |   237,274 100.00

************************************************************************************ You could also format your own output tables rather than copying and pasting Stata output if you find it easier. The key is that as long as the questions are answered in order, and the Stata commands used for each subquestion and associated output are clear, it will be fine.

A note on plagiarism: this is an independent assignment, which I expect you to complete on your own. It is plagiarism to copy someone else’s work verbatim, which includes Stata dofiles. Any work you submit should be yours only.

Thank you note: I am very grateful to Professor Justin Smith for sharing his class material. This assignment represents a modified version of a STATA homework developed by him.

Each sub question is worth 5 points, for a total of 65.

1) (5 Points) Provide a table of basic summary statistics for your data and briefly describe your findings for each variable.

2) Suppose that you are interested in exploring whether mother’s alcohol consumption while pregnant affects a child’s birthweight.

a) (5 Points) Estimate and interpret the parameters in the following baseline specification:

������������ℎ������������ℎ���_��� = ���₀ + ���₁������������ℎ������_��� + ���_���

Assume heteroskedasticity when calculating the standard errors.

b) (5 Points) Test whether the effect of consuming alcohol on birthweight is statistically significant at the 1% significance level.

c) Estimate an alternative specification that extends the baseline specification to include the variable smoker. Assume heteroskedasticity when calculating the standard errors.

i) (5 Points) Interpret all the estimates of the model.

ii) (5 Points) Compare the estimate of the coefficient on alcohol between specifications and comment on omitted variables bias.

iii) (5 Points) Using measures of fit we have discussed in class compare the fit of the model in 2a to that of 2c.

d) (5 Points) Estimate another alternative specification that extends the regression in (c) to include measures of education, age, and marital status. In your specification, use the “married” category as the reference category. Compare the estimate of the coefficient on alcohol to the previous specifications and comment further on omitted variables bias. [Hint: You will first need to generate the corresponding dummy variables for single and divorced categories. Since “married” is the reference category, you do not include a married dummy variable in the regression model.]

e) (5 Points) In the previous regression, precisely interpret the coefficients on the single and divorced dummy variables. Test the hypothesis that the effect on birthweight is the same for single and divorced mothers at the 5% significance level. [Hint: You can use the “test” command in STATA to perform this test.]