Question: Consider a simple model to estimate the effect of personal computer (PC) ownership on college grade point average for graduating seniors at a large public

Consider a simple model to estimate the effect of personal computer (PC) ownership on college grade point average for graduating seniors at a large public university:
GPA = β0 + β1PC + u,
where PC is a binary variable indicating PC ownership.
(i) Why might PC ownership be correlated with u?
(ii) Explain why PC is likely to be related to parents' annual income. Does this mean parental income is a good IV for PC? Why or why not?
(iii) Suppose that, four years ago, the university gave grants to buy computers to roughly one-half of the incoming students, and the students who received grants were randomly chosen. Carefully explain how you would use this information to construct an instrumental variable for PC.

Step by Step Solution

★★★★★

3.24 Rating (153 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

i It has been fairly well established that socioeconomic status affects student performance The erro... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

839-M-E-E-A (754).docx

120 KBs Word File

Students Have Also Explored These Related Econometric Questions!

1. The Simple Regression Model (SRM) requires that a histogram of the response looks like a normal distribution. 2. In the ideal situation, the SRM assumes that observations of the explanatory...

Multiple regression was used to estimate the effect of coaching on SAT-Mathematics scores. Data on 3,492 students (573 of whom were coached) were used to fit the model, E(y) = 0 + 1x1 + 2x2, where y...

A school district undertakes an experiment to estimate the effect of class size on test scores in second grade classes. The district assigns 50% of its previous year's first graders to small...

Can you help me to solve it? Thank you. 2. Consider the simple model to estimate the effect of personal computer (PC) ownership on college grade point average (GPA) for graduating seniors at a large...

1 Consider a simple model to estimate the effect of personal computer (PC) ownership on college grade point average for graduating seniors at a large public university: GPA 5 b0 1 b1PC 1 u, where PC...

15.1 Consider a simple model to estimate the effect of personal computer (PC) ownership on college grade point average for graduating seniors at a large public university: GPA 0 1PC u, where PC is...

Consider a simple model to estimate the effect of personal computer (PC) ownership on college grade point average for graduating seniors at a large public university: GPA 5 b0 1 b1PC 1 u, where PC is...

2. Consider a simple model to estimate the eect of personal computer (PC) ownership on college grade point average for graduating seniors at a large public university: GP A = 0 + 1P C + U; where PC...

We want to find a regression model that explains the academic performance in college. Our baseline regression model is: colgpa = Be + B. Inchsize) + B (In(hsize)) + Bghsperc + BeIn(sat) + Bxfemale...

Chapter 06 - Selecting Employees and Placing Them in Jobs Chapter Six: Selecting Employees and Placing Them in Jobs Human Resource Management 3rd edition by R.A. Noe, J.R. Hollenbeck, B. Gerhart, and...

Find the Y parameters for the network shown in figure and then find the output voltage of the two-port when a 4mA current source is connected to the input port and a 4k? load is connected to the...

What is meant by first-mover advantage? Give an example of a gaming situation with a first-mover advantage.

A sales receipt is used for customer sales on account. True or False

a. Verify that the columns of A in (10.44) are eigenvectors of HHT and determine the associated eigenvalues. b. Let and denote the last two columns of A and verify that +vy and y are also...

Continuation of Exercise 2-63. Suppose three castings are selected at random, without replacement, from the lot of 40. In addition to the definitions of events A and B, let C denote the event that...

A batch of 500 containers for frozen orange juice contains 5 that are defective. Two are selected, at random, without replacement from the batch. (a) What is the probability that the second one...

Continuation of Exercise 2-65. Three containers are selected, at random, without replacement, from the batch. (a) What is the probability that the third one selected is defective given that the first...

Explain the s in the user permissions on the following piece of output from the ls l command. -rws--x--x 1 whiten1 whiten1 0 Jan 8 14:24 myscript

A bond with a coupon rate of 7% makes semiannual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the ask price for the bond on January 30 at 100:03. What is...

Refer to the ANOVA table for this regression. Source d.f. SS MS Regression 3 131,725 43,908 Error 21 518,386 24,685 Total 24 650,111 (a) State the degrees of freedom for the F test for overall...