Using the textbook example of 420 California school districts and the regression of test scores on the student-teacher ratio, you find that the standard error on the slope coefficient is 0.51 when using the heteroskedasticity-robust formula, while it is 0.48 when employing the homoskedasticity-only formula. When calculating the t-statistic, the recommended procedure is to: OA. use the heteroskedasticity-robust formula. OB. first test for homoskedasticity of the errors and then make a decision. OC. use the homoskedasticity-only formula because the t-statistic becomes larger. OD. make a decision depending on how much different the estimate of the slope is under the two procedures.
Using the textbook example of 420 California school districts and the regression of test scores on the student-teacher ratio, you find that the standard error on the slope coefficient is 0.51 when using the heteroskedasticity-robust formula, while it is 0.48 when employing the homoskedasticity-only formula. When calculating the t-statistic, the recommended procedure is to: OA. use the heteroskedasticity-robust formula. OB. first test for homoskedasticity of the errors and then make a decision. OC. use the homoskedasticity-only formula because the t-statistic becomes larger. OD. make a decision depending on how much different the estimate of the slope is under the two procedures.
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter4: Equations Of Linear Functions
Section4.5: Correlation And Causation
Problem 15PPS
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Transcribed Image Text:Using the textbook example of 420 California school districts and the regression of test scores on the student-teacher ratio, you find that the standard error on the slope coefficient is 0.51 when using the heteroskedasticity-robust formula, while it
is 0.48 when employing the homoskedasticity-only formula.
When calculating the t-statistic, the recommended procedure is to:
O A. use the heteroskedasticity-robust formula.
O B.
first test for homoskedasticity of the errors and then make a decision.
O C.
use the homoskedasticity-only formula because the t-statistic becomes larger.
O D. make a decision depending on how much different the estimate of the slope is under the two procedures.
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