2023F_322_Problem Set 5
.pdf
keyboard_arrow_up
School
Rowan University *
*We aren’t endorsed by this school
Course
322
Subject
Economics
Date
Jan 9, 2024
Type
Pages
3
Uploaded by bb055fisher
Econ 322 - Fall 2023
Problem Set 5
Due December 8th, 2023, 8 pm
Please answer each of the questions below. Note that writing only a numeric answer to the ques-
tion is
not
enough to receive full credit unless otherwise stated. Please submit: (1) a PDF/Word
Document with your answers (including any plots/tables), and (2) the
R
(or other language) code
you used to answer the questions.
You need to submit both files for your problem set to be graded.
Total: 60 points.
Question 1: Who Buys Health Insurance? (34 Points)
According to the Center for Disease Control, about 8.4 percent or 27.6 million Americans of all
ages did not have health insurance in 2022. In this exercise, we will study the question of what the
determinants for buying health insurance are. We are interested in the following equation:
insured
i
=
α
+
β
1
X
1
+
...
+
β
k
X
k
+
ε
i
(1)
where
insured
is a dummy variable indicating whether an individual has health insurance and
{
X
1
, ..., X
k
}
is a set of
k
characteristics of an individual (in other words, a list of independent
variables, each of which has a
β
associated to them).
To estimate this equation, we will use the National Health Interview Survey from 2009. In this
survey, respondents were asked about their health insurance status and several of their demographic
and economic characteristics. Below you can find a list with variable descriptions:
•
pid
: personal identifier (anonymized)
•
insured
: dummy variable for whether respondent has at least some health insurance
•
health
: health index, broadly understood
•
age
: the respondent’s age in years
•
educ
: the respondent’s total years of education
•
empl
: dummy variable for whether the respondent is employed
•
inc
: the respondent’s household/family income
Answer the questions below (please round all of your answers to
three
decimal places):
1
1. (5 points) Estimate Equation 1 by OLS only including the health index as an independent
variable.
Report the slope coefficient and the associated heteroskedasticity-robust standard
error. Interpret this coefficient. Do you think this regression suffers from omitted variable bias
(OVB)? Why?
2. (6 points) Estimate the regression in the previous part also including the natural logarithm of
household income as a control variable. Report the regression coefficients and their associated
heteroskedasticity-robust standard errors. Was the coefficient for the health index upward or
downward biased in the previous part? Why (discuss the two conditions of OVB and their sign
for this case)?
3. (6 points) Estimate Equation 1 by OLS including the following as independent variables: health
index, age, years of education, employment indicator, and the natural logarithm of household
income. Report the coefficients and their heteroskedasticity-robust standard errors. Compute
the probability that an individual that has
health
= 5,
age
= 30,
educ
= 13,
empl
= 1, and
inc
= 45
,
000 is insured.
4. (6 points) Now compute the probability that an individual that has
health
= 5,
age
= 21,
educ
= 10,
empl
= 0, and
inc
= 1
,
000 is insured.
Does the linear probability model make
sense in this case? Why?
5. (6 points) Estimate Equation 1 including the same independent variables as in Part 3 but using
a probit model. Compute the probability that an individual that has
health
= 5,
age
= 21,
educ
= 10,
empl
= 0, and
inc
= 1
,
000 is insured. Round this numerical answer to
four
decimal
places. Does the probit model make sense in this case? Why?
6. (5 points) What would be the change in the probability of being insured
for the average in-
dividual
in the dataset if they went from being unemployed to being employed? Answer the
question using the probit model.
Question 2: Crime Exposure and Academic Achievement (26 Points)
As Casey and his co-authors put it in their 2018 paper “Local Violence, Academic Performance,
and School Accountability”, a growing body of research shows that “
random shocks external to the
classroom or school environment (e.g., spikes in air pollution on testing days) may affect measured
test performance
”. Since school evaluation systems heavily rely on test performance, we want to
understand a little bit more how some of these external shocks can distort student test performance.
In this question, we will revisit the main question in the paper: what is the effect of exposure to
crime on test performance? We will depart a little bit from the paper in that we will only focus on
the effect of property crime taking place within 0.1 miles of a school on their students’ performance.
For this exercise, we will use (a subset of) their dataset, “
crime
and
schools.csv
”. Below you
can find a list with variable descriptions:
•
schoolid
: school identifier (denoted by
s
)
•
nhoodid
: identifier for the neighborhood where the school is located (denoted by
n
)
•
year
: calendar year (denoted by
t
)
•
mathpct
: share of students who exceed or meet their math test growth goals during the year
•
crime
exposure
: number of property crimes within 0.1 miles of school
s
in year
t
Page 2
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Questions
Can someone please read the description and answer the following questions please and thank you. I really need help with all 4!!! Please
arrow_forward
Carson used $800 000 of their savings to open a coffee shop. The savings account paid 2% interest. In the first year, Carson sold 20
000 coffees at a price of $2 each, and incurred costs of $18 000 which involved outlays of money. What was Carson's economic
profit in the first year?
Type your numeric answer and submit
arrow_forward
FIN301 Copyright © 2020 Singapore University of Social Sciences (SUSS) Page 5 of 5Timed Online Assignment – July Semester 2020(a) Suppose Jack can get a 2% interest rate for a 6 month USD deposit, solve for the interest rate for a 6 month SGD deposit so that Jack will be indifferent to exchanging the USD now or in 6 months’ time. (Note: The 2% is not an annual rate but is applicable for the 6-month period.)
(b) Suppose Jack decides not to use the forward market to hedge the exchange rate risk but use the futures market instead. Explain one (1) advantage and one (1) disadvantage of using each method.
arrow_forward
What specific tasks arc assigned to the engineering staff in a firm?
arrow_forward
Which of the following alternatives would you rather receive, assuming an interest rate of
8%
per year, compounding annually?
arrow_forward
Solve the given problem using manual computation (geometric in engineering economy subject) provide also a cash flow diagram
How much would you have to deposit now, so that you can withdraw of $10000 starting at the end of year 5, and subsequent withdrawals will decrease a rate of of 10% over the previous year’s until at the end of year 8, if the interest rate is 6%, compounded semi-annually?
arrow_forward
Using the TQM tools in a real-world setting, document your observations and conclusions.
arrow_forward
Given the time value of money, is it ethical not to pay interest? How does the amount or duration of the loan matter?
arrow_forward
Why Should the hotel industry be in operation 24/7 in 365 days?
Why are the products of the hotel industry considered intangible and tangible?
Why should the stakeholders be interrelated with each other
arrow_forward
REA diagram system of Nestle company
arrow_forward
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
arrow_forward
If you borrowed $30,000 at 25% annual interest. You agreed to repay the loan with five equal annual payments.
How much of the total amount repaid is interest?
How much of the third annual payment is interest, and how much principal is there?
If you decided to pay off your loan after the third payment, how much will you pay?
(Please Include Equations used and cashflow diagram)
(Please don't use excel)
arrow_forward
can you do part b, c, d and e i can hse 4 questions for it
arrow_forward
Give some specific examples of period costs?
arrow_forward
\table [[\table[[Toul], [predued]], \table[[Averase], [fixed], [cest]], \table[[Averago], [variah b], [cont]], \table[[Awerage], [
totel], [eand]], \table [[Marginal], [cast]]], [1, 810000, $17.00, $11700, 117], [2, 50.00, 1600, 6600, is], [3, 3333, is 00, 4833, is
].[4.2500, 1425, 3925, 12], [3, 20.00, 1400, 34.00, 13], [6, 16.67, 1400, 30.67, 14], [7, 1420, 1571, 5. 0.00, 26], [s, 1250, 1750,
$0.00, 30], [9.11.11, 19.44, 30.55, 35], [10, 10.00, 21.60, . 60, 41], [11, 900, 2400, 209, 48], [12, 833, 26.67, 3500, 56]] [To
recelve eredie, you must ahow all calculaches asd Meps taken accordiag wo the preth - max probedure we dhcussed in
clasis. a. If the market price bor the firm's output is $12 per unit, will this firm produse in the short rust if it boes prodoos,
what b. Answer querions is part (a) asoming thet the prodact peice is $28 per unit. c. Answer the questions in part (a)
asaming that the produet price is $32 per unit.
Toni
Jwerage
fixed
werage
variable
Average
Marginal
product…
arrow_forward
Explain the concept of the time value of money?
arrow_forward
#3
Please answer the problem
Subject: engineering economics
arrow_forward
Why should the hotel industry be in operation 24/7 in 365 days?
Why are the products of the hotel industry considered intangible and perishable?
Why should the stakeholders be interrelated with each other?
arrow_forward
Typed and correct answer please. I will rate accordingly. Don't do wrong please.
arrow_forward
It’s time to get a new laptop that is $2500. If you save up for it each month it will take one year in an account that earns 5% annual interest. (A)How much would you have to put aside each month to have enough for it? (B)What are the total acquisition costs of saving up for the laptop?
answer it using the annualize percentage change formula
arrow_forward
For the following questions, choose the letter of the best answer (showing work):
2.1. How many months would you have to put $500 per month into an account that earns 4% monthlyin order to accumulate $6,000?(a) 10 months(b) 65 months(c) 15 months(d) 5 months
2.2. A machine will need to be replaced 10 years from today for $10,000. How much must be depositednow into an account that earns 5% per year to cover the replacement cost?(a) $1,486(b) $6,139(c) $10,000(d) $4,810
2.3. An effective rate of 10% per quarter is closest to what effective rate per year?(a) 40.00%(b) 46.41%(c) 10.38%(d) 16.99%
2.4. If the internal rate of return (IRR) of Alternative A is 30%, the IRR of Alternative B is 25%, andMARR is 20%, which of the following is correct?(a) Not enough information is given to determine which alternative is preferred(b) Alternative A is preferred over Alternative B(c) Alternative B is preferred over Alternative A(d) Neither Alternative A nor Alternative B is acceptable
2.5.…
arrow_forward
When a Mexican company purchases a U.S.-made computer, the Mexican company pays for it with
a. U.S. dollars.
b. Mexican pesos.
c. gold.
d. Mexican goods and services.
Type out the correct answer with step by step proper explanation of it within 40 50 minutes.will give you thumbs up only for the correct answer.thank you
e. euros or yen.
arrow_forward
The graph below shows copper prices for several days during the months of July, August, and
September. The price is given per pound of copper. [Click on the graph to open a PDF viewable version in
another tab.]
Copper Price (per pound)
$3.25
$3.20
$3.15
$3.10
$3.05
$3.00
MM
Jul 1
Jul 8
Jul 22
Jul 29
Aug 5
Aug 12
Aug 19
Aug 26
Sep 2
Sep 9
Sep 17
Sep 23
Sep 30
In the U.S., a significant portion of copper is used for wiring in homes. The U.S. Commerce Department
reported in September that building permits for new homes increased 15% from August, indicating that
the demand for copper increased. Also in August, China reported that it would meet its full-year
economic growth target. This news resulted in copper suppliers expecting higher future copper prices.
If both of these factors occurred in the copper market on or around September 23, then which of the
answer choices gives the most likely trend line for copper prices from September 23 to September 30?
More information is needed;…
arrow_forward
ou decided to go and apply for a credit card at your local financial institution.The Prime rate currently announced on June 1 was 3.25%. You have goodcredit history and a FICO score of 700. The lowest rate that they can offer toindividuals is a 18.99% APR for a credit card that gives cashback on purchasesand rewards. You were offered 21.99% APR for the credit card. How did thelender determine or calculate what rate they should offer you?
arrow_forward
Describe the concept of the time value of money?
arrow_forward
Can you please do part (d) (e) (f). Greatly Appreciated!
arrow_forward
SUBJECT: ENGINEERING ECONOMICS TOPIC: AMORTIZATION PLEASE ANSWER THE QUESTION ON THE FIRST PICTURE AND MAKE IT A BASIS ON THE SECOND EQUATION. THANK YOU
arrow_forward
Typed Plzzzz And Asap
Thanks
arrow_forward
AutoSave
File
Document! Word
Chris Navo
Home Insert Draw Design Layout References Mailings Review View MathType Help Acrobat Graphs Format
Cobb and Douglas used economic data published by the government to obtain
Table 2.
Year
P
Year
1899
100
100
DOL
1911
148
216
1900
101
105
107
1912
155
1901
112
110
114
1912
1902
122
117
122
1014
169
152
244
1903
124
122
131
1915
109
156
266
1904
122
121
138
1916
225
183
1905
143
125
149
1917
227
1905
152
124
163
1915
223
201
1907
151
140
170
1919
218
19.08
126
123
485
1920
231
104
407
19.09
155
143
198
1921
179
146
417
1910
159
208
1922
240
161
431
Table 2
Swords et Predictions.
The Cobb Douglass formula is P(L, K) = bLa K¹-a
Determine monetary value of all the goods produced in 1 year or simply the production level
in 1920 for a=.20 and b=1.01.
Round to one decimal place.
arrow_forward
Please see attached
arrow_forward
Create your own creative ethical principle with a combination of ethical principles in Ethics.
arrow_forward
Typed plzzz And Asap
Thanks
arrow_forward
Topic: Gradient Geometric Series
An electronic device is available that will reduce this year’s labor cost by$12543.The equipment is expected to last for eight years. If labor cost increase at an average rate of 7% per year at interest rate is 12% compounded bimonthly. What is the maximum amount that we could justify spending for the device?
Note: Draw the cash flow diagram and use interest rate with five decimal places.
arrow_forward
You can earn 10% a year on your savings. Your dad offers you a Holiday Gift of $1000 this year, $2000 next Holiday, $3000 Holiday 2021. If instead he offered you $6,000 Holiday 2020 (next year). Which should you pick, the single payment or the 3 payments. SHOW YOUR WORK
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
arrow_forward
uestion 3
If you want to minimize interest payments on a loan, you'll need one that has a simple interest rate so that yo
John opened an account, and knew exactly how much it would be worth at the end of the year, because it used
year.
What is simple interest?
Oa. Interest only on original amount saved or borrowed
Ob. interest on original amount saved, borrowed and other interest earned
Oc. a fee paid for the use of someone else's money
Od. taxes on the original amount saved or borrowed
L
A Moving to another question will save this response.
→
arrow_forward
Executive Letter of one page about the Engineering Financial Economic
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education
Related Questions
- Can someone please read the description and answer the following questions please and thank you. I really need help with all 4!!! Pleasearrow_forwardCarson used $800 000 of their savings to open a coffee shop. The savings account paid 2% interest. In the first year, Carson sold 20 000 coffees at a price of $2 each, and incurred costs of $18 000 which involved outlays of money. What was Carson's economic profit in the first year? Type your numeric answer and submitarrow_forwardFIN301 Copyright © 2020 Singapore University of Social Sciences (SUSS) Page 5 of 5Timed Online Assignment – July Semester 2020(a) Suppose Jack can get a 2% interest rate for a 6 month USD deposit, solve for the interest rate for a 6 month SGD deposit so that Jack will be indifferent to exchanging the USD now or in 6 months’ time. (Note: The 2% is not an annual rate but is applicable for the 6-month period.) (b) Suppose Jack decides not to use the forward market to hedge the exchange rate risk but use the futures market instead. Explain one (1) advantage and one (1) disadvantage of using each method.arrow_forward
- What specific tasks arc assigned to the engineering staff in a firm?arrow_forwardWhich of the following alternatives would you rather receive, assuming an interest rate of 8% per year, compounding annually?arrow_forwardSolve the given problem using manual computation (geometric in engineering economy subject) provide also a cash flow diagram How much would you have to deposit now, so that you can withdraw of $10000 starting at the end of year 5, and subsequent withdrawals will decrease a rate of of 10% over the previous year’s until at the end of year 8, if the interest rate is 6%, compounded semi-annually?arrow_forward
- Using the TQM tools in a real-world setting, document your observations and conclusions.arrow_forwardGiven the time value of money, is it ethical not to pay interest? How does the amount or duration of the loan matter?arrow_forwardWhy Should the hotel industry be in operation 24/7 in 365 days? Why are the products of the hotel industry considered intangible and tangible? Why should the stakeholders be interrelated with each otherarrow_forward
- REA diagram system of Nestle companyarrow_forwardhelp please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all workingarrow_forwardIf you borrowed $30,000 at 25% annual interest. You agreed to repay the loan with five equal annual payments. How much of the total amount repaid is interest? How much of the third annual payment is interest, and how much principal is there? If you decided to pay off your loan after the third payment, how much will you pay? (Please Include Equations used and cashflow diagram) (Please don't use excel)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education