Does this mean the STR is unimportant in a policy sense?

Technical note: Why divide by n-2 instead of n-1? n SER= 1 & u? n - 2 i=1 - Division by n-2 is a "degrees of freedom" correction - just like division by n-1 in , except that for the SER, two parameters have been estimated (Bo and B1, by Bo and B1), whereas in s only one has been estimated (uy, by Y). 1 When n is large, it does not matter whether n, n-1, or n-2 are used although the conventional formula uses n-2 when there is a single regressor. - . For details, see SW Section 17.4 Application to the California Test Score example Test score 720 700 TestScore = 698.9 -2.28 x STR 680 660 640 620 600 10 15 20 25 30 Student-teacher ratio 0.05, Estimated Test Score = 698.9 -2.28% STR, R2 SER= 18.6 STR explains only a small fraction of the variation in test scores Does this mean the STR is unimportant in a policy sense? MFIN6201 - Empirical Techniques and Applications in Finance 21 Technical note: Why divide by n-2 instead of n-1? n SER= 1 & u? n - 2 i=1 - Division by n-2 is a "degrees of freedom" correction - just like division by n-1 in , except that for the SER, two parameters have been estimated (Bo and B1, by Bo and B1), whereas in s only one has been estimated (uy, by Y). 1 When n is large, it does not matter whether n, n-1, or n-2 are used although the conventional formula uses n-2 when there is a single regressor. - . For details, see SW Section 17.4 Application to the California Test Score example Test score 720 700 TestScore = 698.9 -2.28 x STR 680 660 640 620 600 10 15 20 25 30 Student-teacher ratio 0.05, Estimated Test Score = 698.9 -2.28% STR, R2 SER= 18.6 STR explains only a small fraction of the variation in test scores Does this mean the STR is unimportant in a policy sense? MFIN6201 - Empirical Techniques and Applications in Finance 21