The following regression uses data on illegal downloading of music. A sample of 500 individuals were asked whether they had downloaded music illegally (theft). In addition, respondents also gave answers to the following; caught: a respondent's belief of her chances of getting caught if she attempted to act illegally (0-10, 10 being "great risk") penalty: a respondent's belief regarding how severe her penalty would be if she got caught (0-10, 10 being “great risk) gender: gender, where male is 1 and female is 0 Edu: years of formal education Income: Income of the respondent (£) a. The estimated model was Theft = Bo + B1 caught + B2penalty + B3gender + B4Income + B5Edu Provide an explanation of the expected signs of each of the coefficients, referring to relevant economic theory.

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The following regression uses data on illegal downloading of music. A sample of 500
individuals were asked whether they had downloaded music illegally (theft). In
addition, respondents also gave answers to the following;
caught: a respondent's belief of her chances of getting caught if she attempted
to act illegally (0-10, 10 being "great risk")
penalty: a respondent's belief regarding how severe her penalty would be if
she got caught (0-10, 10 being “great risk)
gender: gender, where male is 1 and female is 0
Edu: years of formal education
Income: Income of the respondent (£)
a. The estimated model was
Theft = Bo + B1 caught + B2penalty + B3gender + B4Income + B5Edu
Provide an explanation of the expected signs of each of the coefficients, referring
to relevant economic theory.
Transcribed Image Text:The following regression uses data on illegal downloading of music. A sample of 500 individuals were asked whether they had downloaded music illegally (theft). In addition, respondents also gave answers to the following; caught: a respondent's belief of her chances of getting caught if she attempted to act illegally (0-10, 10 being "great risk") penalty: a respondent's belief regarding how severe her penalty would be if she got caught (0-10, 10 being “great risk) gender: gender, where male is 1 and female is 0 Edu: years of formal education Income: Income of the respondent (£) a. The estimated model was Theft = Bo + B1 caught + B2penalty + B3gender + B4Income + B5Edu Provide an explanation of the expected signs of each of the coefficients, referring to relevant economic theory.
b. The results of estimating the model are presented in the following table.
(1)
VARIABLES
Theft
Caught
-0.2***
(0.04)
Penalty
0.01
(0.1)
0.12**
Gender
(0.05)
-0.002***
(0.0001)
-0.02*
Income
Edu
(0.011)
Constant
0.35***
(0.1)
Observations
500
Standard errors in parentheses
p<0.01,
***
**
p<0.05, * p<0.1
Provide an interpretation of the regression results, referring back to your answer to
part a.
Transcribed Image Text:b. The results of estimating the model are presented in the following table. (1) VARIABLES Theft Caught -0.2*** (0.04) Penalty 0.01 (0.1) 0.12** Gender (0.05) -0.002*** (0.0001) -0.02* Income Edu (0.011) Constant 0.35*** (0.1) Observations 500 Standard errors in parentheses p<0.01, *** ** p<0.05, * p<0.1 Provide an interpretation of the regression results, referring back to your answer to part a.
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