Question

Chapter 6 3. Consider the following annual model of the death rate (per million population) due to coronary heart disease in the United States (Y): Y 14010.0Ct 4.0E 1.0Mt t4.0 4.0 2.0 N 31 (1950-1980) R2 .678 where: Cper capita cigarette consumption (pounds of tobacco) in year t Et per capita consumption of edible saturated fats (pounds of butter, margarine, and lard) in year t Mt - per capita consumption of meat (pounds) in year t a. Create and test appropriate null hypotheses at the 10 percent level. What, if anything, seems to be wrong with the estimated coefficient of M? b. The most likely cause of a coefficient that is significant in the unex pected direction is omitted variable bias. Which of the following variables could possibly be an omitted variable that is causing BM's unexpected sign? Explain. Bper capita consumption of hard liquor (gallons) in year t Fthe average fat content (percentage) of the meat that was consumed in year t Wper capita consumption of wine and beer (gallons) in year t Rper capita number of miles run in year t Hper capta open-heart surgeries in year t O per capita amount of oat bran eaten in year t c. If you had to choose one variable to add to the equation, what would it be? Explain your answer. (Hint: You're not limited to the variables listed in part b above.)

Answer 1

64s Cende