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Call: lm(formula = wage ~ age + agesq + exper, data = nbasal) Residuals: Min 1Q

ID: 3223127 • Letter: C

Question

Call:

lm(formula = wage ~ age + agesq + exper, data = nbasal)

Residuals:

    Min      1Q Median      3Q     Max

-2268.8 -608.0 -173.0   378.3 4478.5

Coefficients:

            Estimate Std. Error t value   Pr(>|t|)   

(Intercept)   65.505   2985.866   0.022      0.983   

age          123.113    206.307   0.597      0.551   

agesq         -4.202      3.614 -1.163      0.246   

exper        231.988     48.705   4.763 0.00000314 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 906.3 on 265 degrees of freedom

Multiple R-squared: 0.1875, Adjusted R-squared: 0.1783

F-statistic: 20.39 on 3 and 265 DF, p-value: 0.000000000006448

> summary(mod2)

Call:

lm(formula = lwage ~ age + agesq + exper, data = nbasal)

Residuals:

    Min      1Q Median      3Q     Max

-2.4771 -0.3900 0.1087 0.4969 1.8959

Coefficients:

            Estimate Std. Error t value      Pr(>|t|)   

(Intercept) 4.24357    2.58563   1.641        0.1019   

age          0.24852    0.17865   1.391        0.1654   

agesq       -0.00710    0.00313 -2.269        0.0241 *

exper        0.25593    0.04218   6.068 0.00000000446 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 0.7848 on 265 degrees of freedom

Multiple R-squared: 0.216,   Adjusted R-squared: 0.2072

F-statistic: 24.34 on 3 and 265 DF, p-value: 0.00000000000006049

> mod1<-lm(wage~age+agesq+exper,data=nbasal)

> mod2<-lm(lwage~age+agesq+exper,data=nbasal)

> mod3<-lm(lwage~age+agesq+exper+draft+experXdraft,data=nbasal)

> mod4<-lm(lwage~age+agesq+draft,data=nbasal)

> mod5<-lm(lwage~age+agesq+exper+draft,data=nbasal)

> mod6<-lm(lwage~age+agesq+exper+draft+exper_10Xdraft,data=nbasal)

> mod7<-lm(lwage~age_30+agesq_30+exper_10+draft_1+exper_10Xdraft_1,data=nbasal)

>

>

> summary(mod1)

Call:

lm(formula = wage ~ age + agesq + exper, data = nbasal)

Residuals:

    Min      1Q Median      3Q     Max

-2268.8 -608.0 -173.0   378.3 4478.5

Coefficients:

            Estimate Std. Error t value   Pr(>|t|)   

(Intercept)   65.505   2985.866   0.022      0.983   

age          123.113    206.307   0.597      0.551   

agesq         -4.202      3.614 -1.163      0.246   

exper        231.988     48.705   4.763 0.00000314 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 906.3 on 265 degrees of freedom

Multiple R-squared: 0.1875, Adjusted R-squared: 0.1783

F-statistic: 20.39 on 3 and 265 DF, p-value: 0.000000000006448

> summary(mod2)

Call:

lm(formula = lwage ~ age + agesq + exper, data = nbasal)

Residuals:

    Min      1Q Median      3Q     Max

-2.4771 -0.3900 0.1087 0.4969 1.8959

Coefficients:

            Estimate Std. Error t value      Pr(>|t|)   

(Intercept) 4.24357    2.58563   1.641        0.1019   

age          0.24852    0.17865   1.391        0.1654   

agesq       -0.00710    0.00313 -2.269        0.0241 *

exper        0.25593    0.04218   6.068 0.00000000446 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 0.7848 on 265 degrees of freedom

Multiple R-squared: 0.216,   Adjusted R-squared: 0.2072

F-statistic: 24.34 on 3 and 265 DF, p-value: 0.00000000000006049

> summary(mod3)

Call:

lm(formula = lwage ~ age + agesq + exper + draft + experXdraft,

    data = nbasal)

Residuals:

     Min       1Q   Median       3Q      Max

-2.44617 -0.32023 0.04864 0.34504 1.65358

Coefficients:

              Estimate Std. Error t value             Pr(>|t|)   

(Intercept) 1.2289561 2.0142509   0.610              0.54237   

age          0.4420529 0.1387197   3.187              0.00164 **

agesq       -0.0072206 0.0024120 -2.994              0.00305 **

exper       -0.0409674 0.0401862 -1.019              0.30905   

draft       -0.0559423 0.0048970 -11.424 < 0.0000000000000002 ***

experXdraft 0.0053594 0.0006204   8.638 0.000000000000000904 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 0.587 on 234 degrees of freedom

(29 observations deleted due to missingness)

Multiple R-squared: 0.4854, Adjusted R-squared: 0.4744

F-statistic: 44.14 on 5 and 234 DF, p-value: < 0.00000000000000022

> summary(mod4)

Call:

lm(formula = lwage ~ age + agesq + draft, data = nbasal)

Residuals:

     Min       1Q   Median       3Q      Max

-2.49422 -0.30751 0.09283 0.41890 2.63707

Coefficients:

             Estimate Std. Error t value           Pr(>|t|)   

(Intercept) -0.079132   2.276060 -0.035            0.97229   

age          0.458965   0.160309   2.863            0.00457 **

agesq       -0.006601   0.002787 -2.369            0.01866 *

draft       -0.019653   0.002387 -8.232 0.0000000000000126 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 0.6836 on 236 degrees of freedom

(29 observations deleted due to missingness)

Multiple R-squared: 0.296,   Adjusted R-squared: 0.2871

F-statistic: 33.08 on 3 and 236 DF, p-value: < 0.00000000000000022

> summary(mod5)

Call:

lm(formula = lwage ~ age + agesq + exper + draft, data = nbasal)

Residuals:

     Min       1Q   Median       3Q      Max

-2.48241 -0.32755 0.07521 0.40247 2.36712

Coefficients:

             Estimate Std. Error t value         Pr(>|t|)   

(Intercept) 1.567791   2.307837   0.679          0.49760   

age          0.402755   0.158883   2.535          0.01190 *

agesq       -0.007615   0.002764 -2.755          0.00632 **

exper        0.120535   0.040764   2.957          0.00342 **

draft       -0.017814   0.002430 -7.330 0.00000000000368 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 0.6727 on 235 degrees of freedom

(29 observations deleted due to missingness)

Multiple R-squared: 0.3213, Adjusted R-squared: 0.3097

F-statistic: 27.81 on 4 and 235 DF, p-value: < 0.00000000000000022

> summary(mod6)

Call:

lm(formula = lwage ~ age + agesq + exper + draft + exper_10Xdraft,

    data = nbasal)

Residuals:

     Min       1Q   Median       3Q      Max

-2.44617 -0.32023 0.04864 0.34504 1.65358

Coefficients:

                 Estimate Std. Error t value             Pr(>|t|)   

(Intercept)     1.2289561 2.0142509   0.610              0.54237   

age             0.4420529 0.1387197   3.187              0.00164 **

agesq          -0.0072206 0.0024120 -2.994              0.00305 **

exper          -0.0409674 0.0401862 -1.019              0.30905   

draft          -0.0023482 0.0027754 -0.846              0.39836   

exper_10Xdraft 0.0053594 0.0006204   8.638 0.000000000000000904 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 0.587 on 234 degrees of freedom

(29 observations deleted due to missingness)

Multiple R-squared: 0.4854, Adjusted R-squared: 0.4744

F-statistic: 44.14 on 5 and 234 DF, p-value: < 0.00000000000000022

> summary(mod7)

Call:

lm(formula = lwage ~ age_30 + agesq_30 + exper_10 + draft_1 +

    exper_10Xdraft_1, data = nbasal)

Residuals:

     Min       1Q   Median       3Q      Max

-2.43580 -0.33069 0.06267 0.34895 1.64246

Coefficients: (1 not defined because of singularities)

                   Estimate Std. Error t value             Pr(>|t|)   

(Intercept)       7.5386337 0.1023549 73.652 < 0.0000000000000002 ***

age_30            0.4327157 0.1381964   3.131              0.00196 **

agesq_30         -0.0071008 0.0024064 -2.951              0.00349 **

exper_10         -0.0395884 0.0395991 -1.000              0.31847   

draft_1                  NA         NA      NA                   NA   

exper_10Xdraft_1 0.0056981 0.0004738 12.027 < 0.0000000000000002 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 0.5866 on 235 degrees of freedom

(29 observations deleted due to missingness)

Multiple R-squared: 0.4838, Adjusted R-squared: 0.475

F-statistic: 55.06 on 4 and 235 DF, p-value: < 0.00000000000000022

> anova(mod3,mod4)

Analysis of Variance Table

Model 1: lwage ~ age + agesq + exper + draft + experXdraft

Model 2: lwage ~ age + agesq + draft

Res.Df     RSS Df Sum of Sq      F                Pr(>F)   

1    234 80.623                                             

2    236 110.287 -2   -29.664 43.048 < 0.00000000000000022 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

> anova(mod3,mod5)

Analysis of Variance Table

Model 1: lwage ~ age + agesq + exper + draft + experXdraft

Model 2: lwage ~ age + agesq + exper + draft

Res.Df     RSS Df Sum of Sq      F               Pr(>F)   

1    234 80.623                                            

2    235 106.331 -1   -25.708 74.614 0.000000000000000904 ***

---

Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

B. How does being drafted one selection later affect annual salary for an individual with zero years of experience? Is the effect statistically different from zero? Report the p-value

C. How does being drafted one selection later affect annual salary for an individual with five years of experience? Is the effect statistically different from zero? Report the p-value

D. How does being drafted one selection later affect annual salary for an individual with ten years of experience? Is the effect statistically different from zero? Report the p-value

E. Construct a 95% confidence interval for predicted annual salary of the average player that is 30 years old, has 10 years of experience and was drafted first overall in the nba draft

H0 : 35 :0

Explanation / Answer

Part-A

From summary(mod6) we have t=8.638 and t2=8.6382=74.615.

The t2 is distributed as F with degree of freed(1,234)

Part-B

From summary(mod3) we have p-value of coefficient of draft as p < 0.0000000000000002 which is less than 0.05 and so we conclude that effect of draft is significant with zero years experience. Coefficient of draft is -0.0559423 which is negative and indicates a decrease in annual salary for zero experience as for draft 1.

Part-C:

From summary(mod3) we have p-value of coefficient of draft as p < 0.0000000000000002 which is less than 0.05 and so we conclude that effect of draft is significant with zero years experience.

Also, p-value of coefficient of exper*draft is p= 0.000000000000000904 which is less than 0.05 indicating that effect of draft change as experience change and hence for 5 years experience effect of draft is =-0.0559423+5*0.0053594=-0.0291453 which is negative and indicates a decrease in annual salary for 5 years experience for draft 1.

Part-D:

From summary(mod6) we have p-value of coefficient of exper10*draft is p= 0.000000000000000904 which is less than 0.05 indicating that effect of draft change as experience change and hence for 10 years experience effect of draft 1 by 0.0053594 in annual salary for 10 years experience as draft increase by one unit.

Part-E:

To calculate prediction intevral add an extra data point for these values and use the following link

Prediction Interval for Linear Regression

Assume that the error term in the simple linear regression model is independent of x, and is normally distributed, with zero mean and constant variance. For a given value of x, the interval estimate of the dependent variable y is called the prediction interval.

Problem

In the data set faithful, develop a 95% prediction interval of the eruption duration for the waiting time of 80 minutes.

Solution

We apply the lm function to a formula that describes the variable eruptions by the variable waiting, and save the linear regression model in a new variable eruption.lm.

> attach(faithful)     # attach the data frame
> eruption.lm = lm(eruptions ~ waiting)

Then we create a new data frame that set the waiting time value.

> newdata = data.frame(waiting=80)

We now apply the predict function and set the predictor variable in the newdata argument. We also set the interval type as "predict", and use the default 0.95 confidence level.

> predict(eruption.lm, newdata, interval="predict")
     fit    lwr    upr
1 4.1762 3.1961 5.1564
> detach(faithful)     # clean up

Answer

The 95% prediction interval of the eruption duration for the waiting time of 80 minutes is between 3.1961 and 5.1564 minutes.

Note

Further detail of the predict function for linear regression model can be found in the R documentation.

> help(predict.lm)

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