Homework 5
100 points
The following two problems will require a lot of calculations in STATA. It will generate many pages of output. Here is how your should organize it. The first pages should contain your answers to all the questions, along with showing any key algebraic equations or explanations you need to use along the way. After that, include a printout of the output from the regressions you executed in support of your answers. Highlight any numbers in this output that you used in the first section. (You are encouraged to save paper here, you may print this section with a small font, double-sided and/or with 2-up format.) Last, include a copy of the DO file that contains the commands you asked STATA to execute. Be sure you organize these in a way that will be clear to the reader.
For the following, use robust standard errors in all regressions/logits. (The language is “, robust” at the end of the command.)
Problem 1
In the dataset Smoker, there is information on 1196 males from the United States. Data from this sample includes the variables:
smoke= 1 for smokers, and 0 for nonsmokers
age=age in years
educ= number of years of schooling
income= family income
pcigs= price of cigarettes in the individual’s state
Part 1)
Generate a dummy variable “hi_ed” that is a 1 if a person has 16 or more years of education.
Estimate a linear regression (which in this context is called a linear probability model (LPM)) for the binary variable smoke on the independent variable hi_ed. Report the beta coefficient on the dummy variable and its p-value. In words, express what the beta coefficient means in this case.
Create a frequency table for the smoke and hi_ed variables. The command in STATA is tabulate smoke hi_ed.
Calculate the probability that a person smokes if low education. Calculate the probability for smoking for high edcuation.
What is the relationship between the results for parts b and d?
Calculate the odds that a low education person…