A researcher plans to study the causal effect of police on crime, using data from a...
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A researcher plans to study the causal effect of police on crime, using data from a random sample of U.S. counties. He plans to regress the county's crime rate on the (per capita) size of the county's police force. a) Explain why this regression is likely to suffer from omitted variable bias. Which variables would you add to the regression to control for important omitted variables? (2 marks) b) Use your answer to (a) and the expression for omitted variable bias given in the expression below to determine whether the regression will likely over-or underestimate the effect of police on the crime rate. That is, do you think that ₁ > ₁ or ₁ < ₁ - discuss. (2 marks) B₁ Ju σX B₁+ PXu c) Is R² distinct from R2? Discuss which one would be more appropriate in the context of multiple regression and why. (2 marks) A researcher plans to study the causal effect of police on crime, using data from a random sample of U.S. counties. He plans to regress the county's crime rate on the (per capita) size of the county's police force. a) Explain why this regression is likely to suffer from omitted variable bias. Which variables would you add to the regression to control for important omitted variables? (2 marks) b) Use your answer to (a) and the expression for omitted variable bias given in the expression below to determine whether the regression will likely over-or underestimate the effect of police on the crime rate. That is, do you think that ₁ > ₁ or ₁ < ₁ - discuss. (2 marks) B₁ Ju σX B₁+ PXu c) Is R² distinct from R2? Discuss which one would be more appropriate in the context of multiple regression and why. (2 marks)
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Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
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