3. Suppose that we have a population model that relates hospital total inpatient

Question

3. Suppose that we have a population model that relates hospital total inpatient care cost (cost, total cost of inpatient care, in millions of dollars) to the proportion of inpatient days spent in the intensive care unit (prop icu): Costi E Bo +Buprop icui tui We estimate the parameters using arandom sample of general, short-term hospitals in the United States in 2012. Equation 1 gives OLS estimates of the constant and slope coefficient for this model (1) cost 15 50 prop icui Again, the variable prop icu, indicates the proportion of inpatient days spent in an intensive care unit, which in our sample varies between 0 and 0.60 A. What is the precise interpretation of the slope estimate in equation (1)? B. Suppose that the variable prop icui variable was changed by multiplying by 100 so that this variable now represented the percentage of inpatient days spent in intensive care units, which in our sample would vary between 0 and 60. That is, suppose we issued the following commands in Stata geen perc icu 100 prop icu reg cost perc icu Ci) Given the information provided in this question, is it possible to determine the slope coefficient the numerical value-for this regression? If so, show how you determine it. If not, what is the minimum additional information that is required to determine it? That is, is there anything short of having the entire data set and estimating another OLS regression that would allow you to determine the slope coefficient in this regression?

Explanation / Answer

Ans:

A. Interpretation of slope: 1 unit (100%) increase in proportion of ICU days leads to $50 million increase in total cost.

B. When proportion data is changed to percentage values:

i) Yes, the new slope can be computed using the given information only.

The new slope value will be 50/100 = 0.5

means 1 unit i.e. 1% increase in percentage of ICU days leads to $0.5 million increase in total cost.

Please notice that both the answers A & B are same.

ii) Yes. the new intercept can be computed using the given information only.

The new intercept will be the same i.e. 15.

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.