Use the data in DISCRIM.RAW to answer this question. (See also Computer Exercise C3.8 in Chapter 3.)
(i) Use OLS to estimate the model
and report the results in the usual form. Is J31 statistically different from zero at the 5% level against a two-sided alternative? What about at the 1% level?
(ii) What is the correlation between log(income) and prppov? Is each variable statistically significant in any case? Report the two-sided p-values.
(iii) To the regression in part (i), add the variable log(hseval). Interpret its coefficient and report the two-sided p-value for H0: f3log(hseval) = 0.
(iv) In the regression in part (iii), what happens to the individual statistical significance of log(income) and prppov? Are these variables jointly significant? (Compute a p-value.) What do you make of your answers?
(v) Given the results of the previous regressions, which one would you report as most reliable in determining whether the racial makeup of a zip code influences local fast-food prices?
