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Intermediate Applied Econometrics II/IID
发布时间:2022-08-19
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Intermediate Applied Econometrics II/IID
Graded Group Assignment 1
This assignment should be completed as a group but only one assignment per group submitted. You must be in a group of 3-4 people. Individual work will not be accepted nor graded.
The assignment should be well-presented and well-written. Plots and regression output should be generated within Stata and pasted into a word document. For helpful hints on preparing your homework for e-submission, see: How to prepare your answers for e- submission?
A life insurance company wishes to examine the relationship between the amount of life insurance held by a family and family income. From a random sample of 20 households, the company collected the data in the file insur.dta. The data are in units of thousands of dollars. In this question, you must use STATA wherever possible.
a. Use STATA to provide summary statistics for each variable.
b. Create scatter plots and histograms of the variables. Ensure you have correctly labelled the axes, being careful of the choice of variable for each axis.
c. Estimate the linear regression model between INSURANCE and INCOME. Be careful in choosing your dependent variable and independent variable.
d. Write down the fitted regression model.
e. Using Stata, plot the sample regression function against the scatter plot of the data.
f. Estimate insurance at the 1st, 2nd, and 3rd quartiles of income. (Hint: use the summarize command with the detail option).
g. Write a separate short (1 page) report summarizing your results from parts (a) to (f) above. The report should
- Discuss the summary statistics,
- Interpret the scatterplots and histograms
- Discuss how well the regression fits the data – use the plotted regression line, and the coefficient of determination in answering this part
- Interpret the estimated equation, focussing on the estimated coefficients, the sign and magnitude, and economic significance
- Discuss the predicted insurance at the 3 income levels and comment on anything that stands out.