ECON 113 Lecture Notes - Lecture 5: Percentage Point, Dependent And Independent Variables
Document Summary
Focus: how do we interpret regression coef cients if the y or x variables are not just continuous variables in levels. Suppose we wish to know how ceo salary related to company pro ts. We calculate the regression with salary in terms of dollars and pro ts in terms of dollars and we get the following result: The ceo is predicted to earn ,000 plus 3 cents per dollar of company pro ts. Often regressions will not make sense when they are in nominal terms (in order for the outcome to make sense we need to divide by the relevant population size) Example of using rates to make sense of regressions. Binary variables can only take the value 0 or 1. We often use these to indicate characteristics, where 1 means yes and 0 means no . Hispanic = 0 or 1 smoker = 0 or 1 college graduate = 0 or 1.