2. A study of several hundred professors\' salaries in a large American universi

Question

2. A study of several hundred professors' salaries in a large American university in 1969 yielded the following multivariate regression. S = 230X + 1 8X2 + 100Xs + 490Xa + 190X5 + 50X6 (86) (8) (28) (60) (17) (370) Where S- annual salary Xi-number of books written; X2 = number of ordinary articles published; Xs number of excellent articles published; Xs = number of Ph.D. students supervised; Xs = number of years' experience; Xs = teaching evaluation scores; The Standard Errors (SE) of the OLS estimates are in the parentheses. (a) Assuming 5% level of significance, which Xs show significant explanatory power? of signifieance,which Xo ahow Interpret your findings. (b) Do you see any potential problems in multivariate regression model? Explain.

Explanation / Answer

a) Test statistics = estimate/ standard error

since sample size is large is TS > 2 , the variable will be significant

except x6 , every variable show significant explanatory power

variable estimate standard error t significant x1 230 86 2.674419 yes x2 18 8 2.25 yes x3 100 28 3.571429 yes x4 490 60 8.166667 yes x5 190 17 11.17647 yes x6 50 370 0.135135 no

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