Question

2. Suppose that you wish to estimate the effect of class attendance on college students' performance: final-A + β1ACT + β2att end + β3GPA+ u where ACT is the student's ACT score, attend is the fraction of classes attended over the semester, and GPA is the student's GPA (a) Why might attend be correlated with u? (b) Let dist be the distance from the student's living quarters to the lecture hall. If living quarters are assigned by lottery, will dist be uncorrelated with u? Explain briefly. (c) Assuming that dist and u are uncorrelated, what other assumption must dist satisfy to be a valid IV for atndrte? (d) Which IV assumption can be tested? Explain how you would test it in this case.

Answer 1

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