5. Suppose we examine the factors that determine the abortion rate across the 50 states in...

 

Transcribed Image Text:

5. Suppose we examine the factors that determine the abortion rate across the 50 states in the USA with the following variables; - - Abortion = Abortion rate, number of abortions per thousand women aged 15-44 in 1992. Religion = the percent of a state's population that is Catholic Price = the average price charged for an abortion Laws = a variable that takes the value of 1 if a state enforces a law that restricts abortion, 0 otherwise. Funds = a variable that takes the value of 1 if state funds are available for use to pay for an abortion, 0 otherwise. Educ = the percent of a state's population that is 25 years or older with a high school degree (or equivalent). Income disposable income per capita, 1992. Picket = the percentage of respondents that reported experiencing picketing The regression results with 50 observations are reported below; reg abortion religion price laws funds educ income picket Source SS df MS Model Residual 2862.66338 2094.96246 7 408.951912 42 49.8800585 Total 4957.62584 49 101.176038 Number of obs F(7, 42) Prob > F R-squared Adj R-squared Root MSE 50 8.20 0.0000 = 0.5774 0.5070 7.0626 abortion Coef. Std. Err. t P>|t| [95% Conf. Interval] religion price laws funds educ income picket .0200709 .0863805 -.0423631 -.8731018 2.820003 -.2872551 .0024007 -.1168712 .0222232 0.23 0.817 -1.91 0.063 -.1542521 .1943939 -.0872113 .0024851 2.376566 -0.37 0.715 -5.669206 3.923003 2.783475 1.01 0.317 -2.797276 8.437282 .1995545 -1.44 0.157 -.6899725 .1154622 .0004552 _cons .0421799 14.28396 15.07763 5.27 0.000 -2.77 0.008 0.95 0.349 .0014821 .0033193 -.2019936 -.0317488 -16.14393 44.71185 (a) Interpret each coefficient in the regression results above. (b) [14 marks] What could the consequences of heteroscedasticity on the regression results above be? (c) [6 marks] List the steps of detecting heteroscedasticity in the above results/regression using the White's Test. (d) [10 marks] Mention two remedies that can be applied if indeed the results above are found to suffer from heteroscedasticity. [5 mark] 5. Suppose we examine the factors that determine the abortion rate across the 50 states in the USA with the following variables; - - Abortion = Abortion rate, number of abortions per thousand women aged 15-44 in 1992. Religion = the percent of a state's population that is Catholic Price = the average price charged for an abortion Laws = a variable that takes the value of 1 if a state enforces a law that restricts abortion, 0 otherwise. Funds = a variable that takes the value of 1 if state funds are available for use to pay for an abortion, 0 otherwise. Educ = the percent of a state's population that is 25 years or older with a high school degree (or equivalent). Income disposable income per capita, 1992. Picket = the percentage of respondents that reported experiencing picketing The regression results with 50 observations are reported below; reg abortion religion price laws funds educ income picket Source SS df MS Model Residual 2862.66338 2094.96246 7 408.951912 42 49.8800585 Total 4957.62584 49 101.176038 Number of obs F(7, 42) Prob > F R-squared Adj R-squared Root MSE 50 8.20 0.0000 = 0.5774 0.5070 7.0626 abortion Coef. Std. Err. t P>|t| [95% Conf. Interval] religion price laws funds educ income picket .0200709 .0863805 -.0423631 -.8731018 2.820003 -.2872551 .0024007 -.1168712 .0222232 0.23 0.817 -1.91 0.063 -.1542521 .1943939 -.0872113 .0024851 2.376566 -0.37 0.715 -5.669206 3.923003 2.783475 1.01 0.317 -2.797276 8.437282 .1995545 -1.44 0.157 -.6899725 .1154622 .0004552 _cons .0421799 14.28396 15.07763 5.27 0.000 -2.77 0.008 0.95 0.349 .0014821 .0033193 -.2019936 -.0317488 -16.14393 44.71185 (a) Interpret each coefficient in the regression results above. (b) [14 marks] What could the consequences of heteroscedasticity on the regression results above be? (c) [6 marks] List the steps of detecting heteroscedasticity in the above results/regression using the White's Test. (d) [10 marks] Mention two remedies that can be applied if indeed the results above are found to suffer from heteroscedasticity. [5 mark]