Suppose that you estimate the sample regression function
$\log \text { Salary } _ { i } = 6.84 + .062 \text { Experience } _ { i } + .038 \text { Education } _ { i } - 8.538 \text { Blue Eyes } _ { i } + .019 \text { GPA } _ { i }$
Employing the "eye test" you might suspect that the marginal effect of
A)experience is estimated incorrectly because it does not seem reasonable that each additional year of experience increases salary by 6.2 percent,holding all other independent constant.
B)education is estimated incorrectly because it does not seem reasonable that each additional year of education increases salary by 3.8 percent,holding all other independent constant.
C)having Blue Eyes is estimated incorrectly because it does not seem reasonable that the average salary of individuals with Blue Eyes is 853.8 percent less than the average salary of individuals with other eye colors,holding all other independent constant.
D)GPA is estimated incorrectly because it does not seem reasonable that each one unit increase in GPA increases salary by 1.9 percent,holding all other independent constant.

Question

Suppose that you estimate the sample regression function 
$\log \text { Salary } _ { i } = 6.84 + .062 \text { Experience } _ { i } + .038 \text { Education } _ { i } - 8.538 \text { Blue Eyes } _ { i } + .019 \text { GPA } _ { i }$
Employing the "eye test" you might suspect that the marginal effect of
A)experience is estimated incorrectly because it does not seem reasonable that each additional year of experience increases salary by 6.2 percent,holding all other independent constant.
B)education is estimated incorrectly because it does not seem reasonable that each additional year of education increases salary by 3.8 percent,holding all other independent constant.
C)having Blue Eyes is estimated incorrectly because it does not seem reasonable that the average salary of individuals with Blue Eyes is 853.8 percent less than the average salary of individuals with other eye colors,holding all other independent constant.
D)GPA is estimated incorrectly because it does not seem reasonable that each one unit increase in GPA increases salary by 1.9 percent,holding all other independent constant.

Quizplus · Accepted Answer

A negative coefficient for the variable "Blue Eyes" suggests that individuals with blue eyes may have lower salaries than those with other eye colors, holding all other variables constant. However, the magnitude of the coefficient (-8.538) suggests an unrealistic decrease in salary for those with blue eyes. This may indicate that there could be issues with the accuracy or relevance of this variable in the regression model.

Suppose That You Estimate the Sample Regression Function Employing the "Eye Test" You Might Suspect That the Marginal