Introduction to Econometrics 3rd Edition by James Stock, Mark Watson

Exercise 3

Using the data set TeachingRatings described in Empirical Exercises, carry out the following exercises.
a. Run a regression of Course_Eval on Beauty. What is the estimated slope
b. Run a regression of Course_Eval on Beauty , including some additional variables to control for the type of course and professor characteristics. In particular, include as additional regressors Intro, OneCredit, Female, Minority, and NNEnglish. What is the estimated effect of Beauty on Course_Evall Does the regression in (a) suffer from important omitted variable bias
c. Estimate the coefficient on Beauty for the multiple regression model in (b) using the three-step process in Appendix 6.3 (the Frisch-Waugh theorem). Verify that the three-step process yields the same estimated coefficient for Beauty as that obtained in (b).
d. Professor Smith is a black male with average beauty and is a native English speaker. He teaches a three-credit upper-division course. Predict Professor Smith's course evaluation.
Empirical Exercises
On the text Web site http://www.pearsonhighered.com/stock_watson/ you will find a data file TeachingRatings that contains data on course evaluations, course characteristics, and professor characteristics for 463 courses at the University of Texas at Austin. 1 A detailed description is given in TeachingRatings_Description, also available on the Web site. One of the characteristics is an index of the professor's "beauty" as rated by a panel of six judges. In this exercise, you will investigate how course evaluations are related to the professor's beauty.
a. Construct a scatterplot of average course evaluations ( Course_Eval ) on the professor's beauty {Beauty}. Does there appear to be a relationship between the variables
b. Run a regression of average course evaluations ( Course_Eval ) on the professor's beauty (Beauty ). What is the estimated intercept What is the estimated slope Explain why the estimated intercept is equal to the sample mean of Course_Eval.
c. Professor Watson has an average value of Beauty, while Professor Stock's value of Beauty is one standard deviation above the average. Predict Professor Stock's and Professor Watson's course evaluations.
d. Comment on the size of the regression's slope. Is the estimated effect of Beauty on Course_Eval large or small Explain what you mean by "large" and "small."
e. Does Beauty explain a large fraction of the variance in evaluations across courses Explain.