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ECO 515
Review Worksheet #1 Summer 2020
Deadline: July 15, 2020

Please type your answers below and email a PDF copy to salma.begum@bracu.ac.bd

THE CALIFORNIA TEST SCORE DATA SET

The data used here are from all 420 K-6 and K-8 districts in California with data available for
1998 and 1999. Test scores are the average of the reading and math scores on the Stanford 9
standardized test administered to 5th grade students. The student-teacher ratio used here is the
number of full-time equivalent teachers in the district, divided by the number of students. All of
these data were obtained from the California Department of Education (www.cde.ca.gov).

Series in Data Set:

DIST_CODE: DISTRICT CODE;
READ_SCR: AVG READING SCORE;
MATH_SCR: AVG MATH SCORE;
COUNTY : COUNTY;
DISTRICT: DISTRICT;
GR_SPAN: GRADE SPAN OF DISTRICT;
ENRL_TOT : TOTAL ENROLLMENT;
TEACHERS: NUMBER OF TEACHERS;
COMPUTER: NUMBER OF COMPUTERS;
TESTSCR: AVG TEST SCORE (= (READ_SCR+MATH_SCR)/2 );
COMP_STU: COMPUTERS PER STUDENT ( = COMPUTER/ENRL_TOT);
EXPN_STU: EXPENTITURES PER STUDENT ($’S);
STR: STUDENT TEACHER RATIO (ENRL_TOT/TEACHERS);
EL_PCT: PERCENT OF ENGLISH LEARNERS;
MEAL_PCT: PERCENT QUALIFYING FOR REDUCED-PRICE LUNCH;
CALW_PCT: PERCENT QUALIFYING FOR CALWORKS;
AVGINC: DISTRICT AVERAGE INCOME (IN $1000'S);

a)Download the dataset from the student companion website of Stock and Watson
(https://wps.pearsoned.com/aw_stock_ie_3/178/45691/11696965.cw/index.html). Calculate
summary statistics of STR and TESTSCR.What can you tell from these statistics?

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b) Draw a scatter plot of average test scores (testscr) andstudent-teacher ratio (str). What does
the scatter plot indicate regarding relationship between test scores and class size?

c) Run a regression of testscr on str, expn_stu, comp_stu, meal_pct, calw_pct, avginc, el_pct and
copy the STATA output below.

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d) Write down the estimated regression line from the STATA output.

e) Explain what the coefficient of str means.

f) Report the standard error of regression (SER). What are the units of measurement for the SER
(dollars? years? scores? or is it unit free)?

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g) Report the regression adjusted coefficient of determination. What are the units of
measurement for this coefficient (dollars? years? scores? or is it unit free)? What does it mean?
Why should we use this instead of simple coefficient of determination?

h) Last year a classroom had 19 students and this year it has 23 students. What is the regression’s
prediction for the change in the classroom average test score, holding everything else
unchanged?

i) The student-teacher ratio has a minimum value of 14 and a maximum value of 25.8 in the 420
classrooms. Will the regression give reliable predictions for a class with 35 students? Why or
why not?

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j) Based on your results, can you argue that a smaller class size will increase student test scores
on average?

k) Which explanatory variables are statistically significant? Use the p-value approach and
explain their signs.

l) Is the model valid? Conduct the test of validity and comment.