TABLE 10.1 n Analysis of the Effet aws on Traffic Dearth nffis fatality rate (daaths par 10,000 (1) (2) (2) (4) (5) Drinking ars 20 Drinking ar 0.063 (0.64) 1982 8 982 & 1988 onls 1982-8 4.22 10. 12 37.49 29.62 31.96 0.891 a.926 be individual cnefficient
This exercise refers to the drunk driving panel data regression, summarized
in Regression analysis of Drunk Driving (see attachment)
a. New Jersey has a population of 8.85 million people. Suppose that New
Jersey increased the tax on a case of beer by $2 (in 1988 dollars). Use the
results in column (5) to predict the number of lives that would be saved
over the next year. Construct a 99% confidence interval for your answer.
b. The drinking age in New Jersey is 21. Suppose that New Jersey lowered
its drinking age to 19. Use the results in column (5) to predict the change
in the number of traffic fatalities in the next year. Construct a 95% confidence interval for your answer.
c. Suppose that real income per capita in New Jersey increases by 3% in
the next year. Use the results in column (6) to predict the change in the
number of traffic fatalities in the next year. Construct a 95% confidence
interval for your answer.
d. How should standard errors be clustered in the regressions in columns
(2) through (7)?
e. How should minimum drinking age be included in the regressions?
Should it enter as a continuous variable or as a series of indicator
variables? Be specific about the information you use to assess this
question.
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