You used the data in the file to fit a straight-line model relating a state's average annual number of public corruption convictions (y) to the state's average annual FEMA relief (x).
a. Estimate σ2, the variance of the random error term in the model.
b. Estimate σ, the standard deviation of the random error term in the model.
c. Which of the estimates, part a or b, can be interpreted practically? Why?
d. Make a statement about how accurate the model is in predicting a state's average annual number of public corruption convictions.
For Information: Refer to the Journal of Law and Economics (Nov. 2008) study of the link between Federal Emergency Management Agency (FEMA) disaster relief and public corruption. Exercise 11.20.