The following three equations were estimated using the 1,534 observations in 401
ID: 2507287 • Letter: T
Question
The following three equations were estimated using the 1,534 observations in 401K.RAW:
^prate = 80.29 + 5.44 *mrate + .269 *age - .00013 * totemp
(.78) (.52) (.045) (.00004)
R^2 = .100,
---
R ^2 = .098.
^prate = 97.32 + 5.02 mrate + .314 age - 2.66 * log(totemp)
(1.95) (0.51) (.044) (.28)
R^2 = .144,
---
R ^2 = .142.
^ prate = 80.62 + 5.34 mrate + .290 age - .00043 totemp
(.78) (.52) (.045) (.00009)
+ (.0000000039 totemp) ^ 2
(.0000000010)
R^2 = .108,
---
R ^2 = .106.
Which of these three models do you prefer? Why?
Explanation / Answer
i prefer the model:
^prate = 97.32 + 5.02 mrate + .314 age - 2.66 * log(totemp)
(1.95) (0.51) (.044) (.28)
R^2 = .144,
As its R^2 is comparitively higher than all models given and also , we see that t-stat given for each coefficients in brackets are higher values, indicating significance of these variables
hence it is best model
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