The Graduate Record Examination (GRE) subject test in economics was a multiple-choice measure of knowledge and analytical ability in economics that was used mainly as an entrance criterion for students applying to Ph.D. programs in the “dismal science.” For years, critics claimed that the GRE, like the Scholastic Aptitude Test (SAT), was biased against women and some ethnic groups. To test the possibility that the GRE subject test in economics was biased against women, Mary Hirschfeld, Robert Moore, and Eleanor Brown estimated the following equation (standard errors in parentheses):

Where:

GRE_i = the score of the ith student in the Graduate Record Examination subject test in economics

G_i = a dummy variable equal to 1 if the ith student was a male, 0 otherwise

GPA_i = the GPA in economics classes of the ith student (4 = A, 3 = B, etc.)

SATM_i = the score of the ith student on the mathematics portion of the Scholastic Aptitude Test

SAT V_i = the score of the ith student on the verbal portion of the Scholastic Aptitude Test

a. Carefully explain the meaning of the coefficient of G in this equation.

b. Does this result prove that the GRE is biased against women? Why or why not?

c. If you were going to add one variable to Equation 3.9, what would it be? Explain your reasoning.

d. Suppose that the authors had defined their gender variables as G_i = a dummy variable equal to 1 if the ith student was a female, 0 otherwise. What would the estimated Equation 3.9 have been in that case?