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

Exercise 19

The data set in CATHOLIC includes test score information on over 7,000 students in the United States who were in eighth grade in 1988. The variables math12 and read12 are scores on twelfth grade standardized math and reading tests, respectively.

(i) How many students are in the sample? Find the means and standard deviations of math12 and read12.

(ii) Run the simple regression of math12 on read12 to obtain the OLS intercept and slope estimates. Report the results in the form

where you fill in the values for  and  and also replace the question marks.

(iii) Does the intercept reported in part (ii) have a meaningful interpretation? Explain.

(iv) Are you surprised by the  that you found? What about R²?

(v) Suppose that you present your findings to a superintendent of a school district, and the superintendent says, “Your findings show that to improve math scores we just need to improve reading scores, so we should hire more reading tutors.” How would you respond to this comment? (Hint: If you instead run the regression of read12 on math12, what would you expect to find?)