# chapter1 计量经济学答案 modern approach

1 CHAPTER 1 TEACHING NOTES You have substantial latitude about what to emphasize in Chapter 1. I find it useful to talk about the economics of crime example Example 1.1 and the wage example Example 1.2 so that students see, at the outset, that econometrics is linked to economic reasoning, even if the economics is not complicated theory. I like to familiarize students with the important data structures that empirical economists use, focusing primarily on cross-sectional and time series data sets, as these are what I cover in a first-semester course. It is probably a good idea to mention the growing importance of data sets that have both a cross-sectional and time dimension. I spend almost an entire lecture talking about the problems inherent in drawing causal inferences in the social sciences. I do this mostly through the agricultural yield, return to education, and crime examples. These examples also contrast experimental and nonexperimental observational data. Students studying business and finance tend to find the term structure of interest rates example more relevant, although the issue there is testing the implication of a simple theory, as opposed to inferring causality. I have found that spending time talking about these examples, in place of a al review of probability and statistics, is more successful and more enjoyable for the students and me. 2 SOLUTIONS TO PROBLEMS 1.1 i Ideally, we could randomly assign students to classes of different sizes. That is, each student is assigned a different class size without regard to any student characteristics such as ability and family background. For reasons we will see in Chapter 2, we would like substantial variation in class sizes subject, of course, to ethical considerations and resource constraints. ii A negative correlation means that larger class size is associated with lower perance. We might find a negative correlation because larger class size actually hurts perance. However, with observational data, there are other reasons we might find a negative relationship. For example, children from more affluent families might be more likely to attend schools with smaller class sizes, and affluent children generally score better on standardized tests. Another possibility is that, within a school, a principal might assign the better students to smaller classes. Or, some parents might insist their children are in the smaller classes, and these same parents tend to be more involved in their children’s education. iii Given the potential for confounding factors – some of which are listed in ii – finding a negative correlation would not be strong evidence that smaller class sizes actually lead to better perance. Some way of controlling for the confounding factors is needed, and this is the subject of multiple regression analysis. 1.2 i Here is one way to pose the question If two firms, say A and B, are identical in all respects except that firm A supplies job training one hour per worker more than firm B, by how much would firm A’s output differ from firm B’s ii Firms are likely to choose job training depending on the characteristics of workers. Some observed characteristics are years of schooling, years in the workforce, and experience in a particular job. Firms might even discriminate based on age, gender, or race. Perhaps firms choose to offer training to more or less able workers, where “ability” might be difficult to quantify but where a manager has some idea about the relative abilities of different employees. Moreover, different kinds of workers might be attracted to firms that offer more job training on average, and this might not be evident to employers. iii The amount of capital and technology available to workers would also affect output. So, two firms with exactly the same kinds of employees would generally have different outputs if they use different amounts of capital or technology. The quality of managers would also have an effect. iv No, unless the amount of training is randomly assigned. The many factors listed in parts ii and iii can contribute to finding a positive correlation between output and training even if job training does not improve worker productivity. 1.3 It does not make sense to pose the question in terms of causality. Economists would assume that students choose a mix of studying and working and other activities, such as attending class, leisure, and sleeping based on rational behavior, such as maximizing utility subject to the constraint that there are only 168 hours in a week. We can then use statistical s to 3 measure the association between studying and working, including regression analysis that we cover starting in Chapter 2. But we would not be claiming that one variable “causes” the other. They are both choice variables of the student. SOLUTIONS TO COMPUTER RCISES C1.1 i The average of educ is about 12.6 years. There are two people reporting zero years of education, and 19 people reporting 18 years of education. ii The average of wage is about 5.90, which seems low in 2005. iii Using Table B-60 in the 2004 Economic Report of the President, the CPI was 56.9 in 1976 and 184.0 in 2003. iv To convert 1976 dollars into 2003 dollars, we use the ratio of the CPIs, which is 184/56.93.23. Therefore, the average hourly wage in 2003 dollars is roughly 3.235.9019.06, which is a reasonable figure. v The sample contains 252 women the number of observations with female 1 and 274 men. C1.2 i There are 1,832 observations in the sample, but 110 observations are missing the value for cigs. Of the 1,722 non-missing values of cigs, 147 women have cigs 0. ii The average of cigs is about 1.09 using, of course, only the 1,722 with non-missing data. This average includes the 1,575 women who did not smoke. Reporting just the average masks the fact that over 91 85 percent of the women did not smoke. It makes more sense to say that the “typical” woman does not smoke during pregnancy; indeed, the median and modal number of cigarettes smoked is zero. iii The average of cigs for women with cigs 0 is about 12.8. Of course, this is much higher than the average over the entire sample because we are excluding all of the non-smokers. This is an example of a “conditional” average, because we are conditioning on smoking. iv The average of fatheduc is about 13.9. There are 47 observations with a missing value for fatheduc. v By far the most common value of npvis is 12 visits reported by 618 women. The next most common value is 10 reported by 199 women. C1.3 i The largest is 100, the smallest is 0. ii 38 out of 1,823, or about 2.1 percent of the sample. iii 17 4 iv The average of math4 is about 71.9 and the average of read4 is about 60.1. So, at least in 2001, the reading test was harder to pass. v The sample correlation between math4 and read4 is about .843, which is a very high degree of linear association. Not surprisingly, schools that have high pass rates on one test have a strong tendency to have high pass rates on the other test. vi The average of exppp is about 5,194.87. The standard deviation is 1,091.89, which shows rather wide variation in spending per pupil. [The minimum is 1,206.88 and the maximum is 11,957.64.] C1.4 i 185/445 .416 is the fraction of men receiving job training, or about 41.6. ii For men receiving job training, the average of re78 is about 6.35, or 6,350. For men not receiving job training, the average of re78 is about 4.55, or 4,550. The difference is 1,800, which is very large. On average, the men receiving the job training had earnings about 40 higher than those not receiving training. iii About 24.3 of the men who received training were unemployed in 1978; the figure is 35.4 for men not receiving training. This, too, is a big difference. iv The differences in earnings and unemployment rates suggest the training program had strong, positive effects. Our conclusions about economic significance would be stronger if we could also establish statistical significance which is done in Computer rcise C9.10 in Chapter 9.