Develop a model to test the hypothesis that location is the most important factor in determing the price of a house. The model should include variables that estimate the value of the home by the home’s characteristics such as the number of rooms or bathrooms; and the neighborhood’s characteristics like noise, traffic, and crime. Provide justification using these variables in the model and evaluate the overall fit of the econometric model to the simple theory that the key pricing factor is location.
Develop a model to test the hypothesis that location is the most important factor in determing the price of a house. The model should include variables that estimate the value of the home by the home’s characteristics such as the number of rooms or bathrooms; and the neighborhood’s characteristics like noise, traffic, and crime. Provide justification using these variables in the model and evaluate the overall fit of the econometric model to the simple theory that the key pricing factor is location.
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How do you evaluate the coefficients for the independent variables against the size and statistical significance of the coefficient for the location variable to reject or fail to reject the hypothesis?.
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