Introductory Econometrics: A Modern Approach 6th Edition by Jeffrey M Wooldridge

Exercise 13

Use the data in CHARITY.RAW [obtained from Franses and Paap (2001)] to answer the following questions:

(i) What is the average gift in the sample of 4,268 people (in Dutch guilders)? What percentage of people gave no gift?

(ii) What is the average mailings per year? What are the minimum and maximum values?

(iii) Estimate the model

by OLS and report the results in the usual way, including the sample size and ^-squared.

(iv) Interpret the slope coefficient. If each mailing costs one guilder, is the charity expected to make a net gain on each mailing? Does this mean the charity makes a net gain on every mailing? Explain.

(v) What is the smallest predicted charitable contribution in the sample? Using this simple regression analysis, can you ever predict zero for gift?

Step 1 of 5

(i)

The average gift is about 7.44 Dutch guilders. Out of 4,268 respondents, 2,561 did not give a gift, or about 60 percent.