Question 1The government of a developing country wants to implement a program where poorfamilies receive food stamps that can be used to purchase prepackaged foods with highnutritional value. The government decides to set up an experiment where 500 families(each with 1 child) are randomly assigned to a treatment group (eligible for food stamps, T; =1) and to a control group (ineligible for food stamps, Ti = 0). The government has hired aresearcher to investigate the effect of food stamps on the probability that a child has poorhealth.After the experiment, the researcher performs a regression of H; (a binary variable thatequals 1 if a child has poor health) on Fi (a binary variable that equals 1 if a familyreceived food stamps). She obtains the following OLS estimation results.regress H F, robustLinear regressionHFconsCoef.-.2090787.6538462Robust-Std. Err.04666290381663t-4.4817.13P>|t|Number of obs =F( 1,Prob> F498)R-squaredRoot MSE0.0000.00050020.080.00000.0375.49141[95% Conf. Interval]-.30075921.5788593-.1173983728833a) Interpret the two estimated coefficients.b) The researcher finds out that some of the families in the control group received foodstamps. Explain whether we can interpret the estimated OLS coefficient on F as thecausal effect of food stamps on child health? The researcher decides to estimate the effect of food stamps using an instrumentalvariable approach. She uses assignment to the treatment group as instrument for theactual receipt of food stamps. She obtains the following first stage estimation results.regress F T, robust noheaderFTconsCoef.. 624.376RobustStd. Err..0306963. 0306963tE [Hi/Ti = x]E[Fi/Ti = x]20:3312.25P>|t|Ti = 10.47610.0000.000[95% Conf. Interval]c) Do you think that the instrument relevance condition holds? Is T'a weak instru- ment?d) Do you think that the instrument exogeneity condition holds?e) The following table shows the averages of Hi and Fi for those assigned to treatmentgroup (T; = 1) and for those assigned to the control group (T; = 1). Use the results inthe table below to obtain the instrumental variable estimate of the effect of foodstamps on the probability that a child has poorhealth.Ti = 00.5440.376. 56368973156897.6843103.4363103

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MATLAB: An Introduction with Applications

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ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

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a) Interpret the two estimated coefficients. b) The researcher finds out that some of the families in the control group received food stamps. Explain whether we can interpret the estimated OLS coefficient on F as the causal effect of food stamps on child health?