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.
Big Ideas Math A Bridge To Success Algebra 1: Student Edition 2015
1st Edition
ISBN:9781680331141
Author:HOUGHTON MIFFLIN HARCOURT
Publisher:HOUGHTON MIFFLIN HARCOURT
Chapter4: Writing Linear Equations
Section: Chapter Questions
Problem 11CT
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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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