What determines how much drivers are fined if they are stopped for speeding? Do demographics like age, gender, and race matter? To answer this question, we'll investigate traffic stops and citations in Massachusetts using data from Makowsky and Stratmann (2009). Even though state law sets a formula for tickets based on how fast a person was driving, police officers in practice often deviate from the formula. Table 5.12 describes data in speeding_tickets_text.dta that includes information on all traffic stops. An amount for the fine is given only for observations in which the police officer decided to assess a fine.

(a) Estimate a bivariate OLS model in which ticket amount is a function of age. Is age statistically significant? Is endogeneity possible?

(b) Estimate the model from part (a), also controlling for miles per hour over the speed limit. Explain what happens to the coefficient on age and why.

(c) Suppose we had only the first thousand observations in the data set. Estimate the model from part (b), and report on what happens to the standard errors and \(t\) statistics when we have fewer observations.

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TABLE 5.12 Variables for Speeding Ticket Data Variablename MPHover Description Miles per hour over the speed limit amount age Assessed fine for the ticket Age of driver