School

John Brown Univeristy **We aren't endorsed by this school

Course

ECON ECONOMETRI

Subject

Economics

Date

Nov 8, 2023

Type

Other

Pages

3

Uploaded by DeanExploration7479 on coursehero.com

---
title: "LAB 2.2 -- COMPUTER EXERCISES C2 and C6"
author: "Kai Thng"
date: "9/12/2022"
output: html_document
---
```{r setup, include=TRUE}
knitr::opts_chunk$set(echo = TRUE, include=TRUE)
options(scipen=999)
library(wooldridge)
library(texreg)
library(tidyverse)
library(formattable)
library(psych)
```
#### C2 Using the CEOSAL2 Dataset
```{r}
head(ceosal2)
psych::describe(ceosal2)
```
##### (i) Find the average salary and the average tenure in the sample.
```{r}
xsalary <- mean(ceosal2$salary)
xsalary
xceoten <- mean(ceosal2$ceoten)
xceoten
```
The average salary for chief executives for U.S. corporations is 865,864 dollars.
The average years of tenure for chief executives for U.S. corporations is7.95
years.
##### (ii) How many CEOs are in their first year as CEO (that is, ceoten=0)? What
is the longest tenure as a CEO?
```{r}
firstceoten <- count(ceosal2,ceoten=0)
firstceoten
maxceoten <- max(ceosal2$ceoten)
maxceoten
```
The number of Chief executive officers that are in their first year was sound to be
177.
The longest tenured CEO has been at the company for 37 years.
##### (iii) Estimate the simple regression model and report your results in the
usual form. What is the (approximate) predicted percentage increase in salary given
one more year as a CEO?
```{r}
model <- lm(salary ~ ceoten, data=ceosal2)
model
```

The simple regression model for salary is log(**salary**)= 772.43 + 11.75
**ceoten** + u.
The approximate predicted percentage increase in salary given one more year as a
CEO is 11.75%.
#### C6: Using the MeAP93 set
```{r}
head(meap93)
psych::describe(meap93)
```
##### (i)Do you think each additional dollar spent has the same effect on the pass
rate, or does a diminishing effect seem more appropriate? Explain.
```{r}
plot(meap93$math10,meap93$expend)
```
Based on the scatter plot, there seems to be a diminishing return in the pass rate
with each dollar added. The spread of the dots gets wider as dollars are increased
instead of there being more at higher scores.
##### (ii) In the population model argue that B1/10 is the percentage point change
in math10 given a 10% increase in expend.
This makes sense because the model is given with log and 10% increase in expend
would be the same as a b1/10 percentage point in math 10 since b1/10 is just .1.
therefore both would equal 1.116%.
##### (iii) In the population model argue that B1/10 is the percentage point change
in math10 given a 10% increase in expend.
```{r}
model <- lm(math10~lexpend,data = meap93)
model
count(meap93)
summary(model)
```
math10=-69.34+11.164log(expend)+u
n=408, R2=0.02966
The B0 of the model is -69.34.
The B1 of the model is 11.164.
There are 408 observations in the sample.
2.97 percent of the the math pass rate is explained by the model with spending per
student.
##### (IV) How big is the estimated spending effect? Namely, if spending increases
by 10%, what is the estimated percentage point increase in math10?
The estimated spending effect is 11.164 which is statistically significant at 5%.
When spending increases by 10% the estimated percentage point increase in math10 is
1.116 since a 10% increase in spending is equal to a B1/10 percentage point change
in math 10.
##### (V) One might worry that regression analysis can produce fitted values for
math10 that are greater than 100. Why is this not much of a worry in this data set?
This is not too much of a worthy because in order to have a an analysis that
produces values greater than 100 spending would have to be at least $3,867,040.

-69.341+11.164log(expend)>100
11.164log(expend)>169.341
log(expend)>15.168
expend>e^15.168
expend>3,867,040
#### End