Assignment 2

Due Wednesday, October 13, 4pm Atlantic

Please submit via the Assignment 2 dropbox on the course webpage
Note that this assignment (as well as all other material submitted in this
course) will be checked for plagiarism via the software package ‘Urkund.’
This assignment is worth 5/100 points in the calculation of your final
grade.
Suppose a researcher uses survey microdata and estimates the following model of the
correlates of life satisfaction in Canada:

LS = a + b1 Poor + b2 Rich + b3 University + b4 Atlantic + u

Coefficent Standard Error

Dummy = 1 if Poor -2.500 0.25
Dummy = 1 if Rich 1.000 0.25
Dummy=1 if Has a -0.400 0.50
University Degree
Dummy=1 if Resides 0.250 0.100
in Atlantic
Intercept 8.0 2.00
R-squared = 0.2
• LS is the respondent’s rating of life satisfaction on a scale from 0 to 10
• Poor is a dummy variable = 1 if household income is less than 50%
median equivalent income; = 0 otherwise
• Rich is a dummy variable =1 if household income is in the top quintile
of the equivalent income distribution; = 0 otherwise
• University is a dummy variable = 1 if the individual has university level
of education; =0 otherwise
• Atlantic is a dummy variable = 1 if the individual lives in the Atlantic
region; =0 otherwise
1. What is the research question being asked?
2. How do we interpret the estimated coefficients?
• Which explanatory variables are statistically significant and how do you
know?
• How large are the effect sizes? (For example, controlling income and
education, what is the predicted difference in life satisfaction for an individual
who lives in the Atlantic region, etc.)
3. What is the predicted life satisfaction for a poor individual living in
Atlantic Canada without a university degree?
4. What is the over-all goodness of fit?
5. What, overall, is the ‘story’ indicated by the results?
Further note:
• Write in your own words (it is not okay just to ‘change the words of
someone else a little bit’)
• You can still use in-text citation and include a bibliography if you make
use of any reference materials in answering these questions
• Please hand in a pdf version of your assignment