Introductory Econometrics Using R

Also using Python and Stata

Example3.1 Determinants of College GPA

Install/load necessary packages

library(wooldridge)
library(psych)
library(stargazer)
options(width=120)
describe(gpa1)
##          vars   n  mean   sd median trimmed  mad  min max range  skew kurtosis   se
## age         1 141 20.89 1.27   21.0   20.78 1.48 19.0  30  11.0  3.20    18.86 0.11
## soph        2 141  0.02 0.14    0.0    0.00 0.00  0.0   1   1.0  6.56    41.39 0.01
## junior      3 141  0.38 0.49    0.0    0.35 0.00  0.0   1   1.0  0.48    -1.79 0.04
## senior      4 141  0.50 0.50    1.0    0.50 0.00  0.0   1   1.0 -0.01    -2.01 0.04
## senior5     5 141  0.09 0.29    0.0    0.00 0.00  0.0   1   1.0  2.79     5.82 0.02
## male        6 141  0.52 0.50    1.0    0.53 0.00  0.0   1   1.0 -0.10    -2.00 0.04
## campus      7 141  0.17 0.38    0.0    0.09 0.00  0.0   1   1.0  1.74     1.02 0.03
## business    8 141  0.79 0.41    1.0    0.87 0.00  0.0   1   1.0 -1.44     0.08 0.03
## engineer    9 141  0.04 0.19    0.0    0.00 0.00  0.0   1   1.0  4.97    22.87 0.02
## colGPA     10 141  3.06 0.37    3.0    3.04 0.30  2.2   4   1.8  0.32    -0.44 0.03
## hsGPA      11 141  3.40 0.32    3.4    3.41 0.30  2.4   4   1.6 -0.31    -0.15 0.03
## ACT        12 141 24.16 2.84   24.0   24.12 2.97 16.0  33  17.0  0.06     0.43 0.24
## job19      13 141  0.41 0.49    0.0    0.39 0.00  0.0   1   1.0  0.36    -1.89 0.04
## job20      14 141  0.17 0.38    0.0    0.09 0.00  0.0   1   1.0  1.74     1.02 0.03
## drive      15 141  0.21 0.41    0.0    0.13 0.00  0.0   1   1.0  1.44     0.08 0.03
## bike       16 141  0.36 0.48    0.0    0.33 0.00  0.0   1   1.0  0.57    -1.69 0.04
## walk       17 141  0.43 0.50    0.0    0.42 0.00  0.0   1   1.0  0.27    -1.94 0.04
## voluntr    18 141  0.22 0.42    0.0    0.15 0.00  0.0   1   1.0  1.34    -0.21 0.04
## PC         19 141  0.40 0.49    0.0    0.37 0.00  0.0   1   1.0  0.42    -1.84 0.04
## greek      20 141  0.32 0.47    0.0    0.27 0.00  0.0   1   1.0  0.77    -1.42 0.04
## car        21 141  0.77 0.42    1.0    0.84 0.00  0.0   1   1.0 -1.29    -0.34 0.04
## siblings   22 141  0.94 0.25    1.0    1.00 0.00  0.0   1   1.0 -3.53    10.54 0.02
## bgfriend   23 141  0.48 0.50    0.0    0.47 0.00  0.0   1   1.0  0.10    -2.00 0.04
## clubs      24 141  0.60 0.49    1.0    0.63 0.00  0.0   1   1.0 -0.42    -1.84 0.04
## skipped    25 141  1.08 1.09    1.0    0.91 1.48  0.0   5   5.0  1.22     1.52 0.09
## alcohol    26 141  1.90 1.37    2.0    1.78 1.48  0.0   7   7.0  0.97     1.43 0.12
## gradMI     27 141  0.87 0.33    1.0    0.96 0.00  0.0   1   1.0 -2.21     2.90 0.03
## fathcoll   28 141  0.59 0.49    1.0    0.61 0.00  0.0   1   1.0 -0.36    -1.89 0.04
## mothcoll   29 141  0.54 0.50    1.0    0.55 0.00  0.0   1   1.0 -0.15    -1.99 0.04
gpa_mols <- lm(colGPA ~ hsGPA + ACT + 1, data=gpa1)
gpa_sols <- lm(colGPA ~ ACT + 1, data=gpa1)
stargazer(gpa_sols, gpa_mols, type="text", align=TRUE)
## 
## =================================================================
##                                  Dependent variable:             
##                     ---------------------------------------------
##                                        colGPA                    
##                              (1)                    (2)          
## -----------------------------------------------------------------
## hsGPA                                            0.453***        
##                                                   (0.096)        
##                                                                  
## ACT                        0.027**                 0.009         
##                            (0.011)                (0.011)        
##                                                                  
## Constant                  2.403***               1.286***        
##                            (0.264)                (0.341)        
##                                                                  
## -----------------------------------------------------------------
## Observations                 141                    141          
## R2                          0.043                  0.176         
## Adjusted R2                 0.036                  0.164         
## Residual Std. Error   0.366 (df = 139)       0.340 (df = 138)    
## F Statistic         6.207** (df = 1; 139) 14.781*** (df = 2; 138)
## =================================================================
## Note:                                 *p<0.1; **p<0.05; ***p<0.01

Example 3.2. Wage equation

wage_mols <- lm(lwage ~ educ + exper + tenure + 1, data=wage1)
stargazer(wage_mols, type="text", align=TRUE)
## 
## ===============================================
##                         Dependent variable:    
##                     ---------------------------
##                                lwage           
## -----------------------------------------------
## educ                         0.092***          
##                               (0.007)          
##                                                
## exper                         0.004**          
##                               (0.002)          
##                                                
## tenure                       0.022***          
##                               (0.003)          
##                                                
## Constant                     0.284***          
##                               (0.104)          
##                                                
## -----------------------------------------------
## Observations                    526            
## R2                             0.316           
## Adjusted R2                    0.312           
## Residual Std. Error      0.441 (df = 522)      
## F Statistic           80.391*** (df = 3; 522)  
## ===============================================
## Note:               *p<0.1; **p<0.05; ***p<0.01

Example 3.3. Participation in 401(k) pension plans

pension_mols <- lm(prate ~ mrate + age + 1, data=k401k)
stargazer(pension_mols, type="text", align=TRUE)
## 
## ===============================================
##                         Dependent variable:    
##                     ---------------------------
##                                prate           
## -----------------------------------------------
## mrate                        5.521***          
##                               (0.526)          
##                                                
## age                          0.243***          
##                               (0.045)          
##                                                
## Constant                     80.119***         
##                               (0.779)          
##                                                
## -----------------------------------------------
## Observations                   1,534           
## R2                             0.092           
## Adjusted R2                    0.091           
## Residual Std. Error     15.937 (df = 1531)     
## F Statistic          77.791*** (df = 2; 1531)  
## ===============================================
## Note:               *p<0.1; **p<0.05; ***p<0.01

Example 3.4. Determinants of College GPA, R-squared.

gpa_mols = lm(colGPA ~ hsGPA + ACT + 1, data=gpa1)
stargazer(gpa_mols, type="text", align=TRUE)
## 
## ===============================================
##                         Dependent variable:    
##                     ---------------------------
##                               colGPA           
## -----------------------------------------------
## hsGPA                        0.453***          
##                               (0.096)          
##                                                
## ACT                            0.009           
##                               (0.011)          
##                                                
## Constant                     1.286***          
##                               (0.341)          
##                                                
## -----------------------------------------------
## Observations                    141            
## R2                             0.176           
## Adjusted R2                    0.164           
## Residual Std. Error      0.340 (df = 138)      
## F Statistic           14.781*** (df = 2; 138)  
## ===============================================
## Note:               *p<0.1; **p<0.05; ***p<0.01

Example3.5 Arrest records

crime_mols = lm(narr86 ~ pcnv + ptime86 + qemp86 + 1, data=crime1)
crime_mols2 = lm(narr86 ~ avgsen + pcnv + ptime86 + qemp86 + 1, data=crime1)
stargazer(crime_mols, crime_mols2, type="text", align=TRUE)
## 
## =====================================================================
##                                    Dependent variable:               
##                     -------------------------------------------------
##                                          narr86                      
##                               (1)                      (2)           
## ---------------------------------------------------------------------
## avgsen                                                0.007          
##                                                      (0.005)         
##                                                                      
## pcnv                       -0.150***                -0.151***        
##                             (0.041)                  (0.041)         
##                                                                      
## ptime86                    -0.034***                -0.037***        
##                             (0.009)                  (0.009)         
##                                                                      
## qemp86                     -0.104***                -0.103***        
##                             (0.010)                  (0.010)         
##                                                                      
## Constant                    0.712***                 0.707***        
##                             (0.033)                  (0.033)         
##                                                                      
## ---------------------------------------------------------------------
## Observations                 2,725                    2,725          
## R2                           0.041                    0.042          
## Adjusted R2                  0.040                    0.041          
## Residual Std. Error    0.842 (df = 2721)        0.841 (df = 2720)    
## F Statistic         39.096*** (df = 3; 2721) 29.956*** (df = 4; 2720)
## =====================================================================
## Note:                                     *p<0.1; **p<0.05; ***p<0.01

Example 3.6 Wage equation

wage_sols = lm(lwage ~ educ + 1, data=wage1)
stargazer(wage_sols, type="text", align=TRUE)
## 
## ===============================================
##                         Dependent variable:    
##                     ---------------------------
##                                lwage           
## -----------------------------------------------
## educ                         0.083***          
##                               (0.008)          
##                                                
## Constant                     0.584***          
##                               (0.097)          
##                                                
## -----------------------------------------------
## Observations                    526            
## R2                             0.186           
## Adjusted R2                    0.184           
## Residual Std. Error      0.480 (df = 524)      
## F Statistic          119.582*** (df = 1; 524)  
## ===============================================
## Note:               *p<0.1; **p<0.05; ***p<0.01