Estimate Std.Error t value Pr(>|t|) (Intercept): 10.859 0.3316 18.34 < 0.001 fem

Question

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

(Intercept): 10.859 0.3316 18.34 < 0.001

female -0.288 0.0542 -5.11 < 0.001

R 2 0.57

We fit a model log (yi) = 0 +1xi +²i where yi is yearly income in dollars, i.e. is continuous and positive; log(yi) is the natural log of yearly income; and xi is a dichotomous (dummy) variable where 1=female and 0=male. Using the results above, which of the following interpretations is correct according to this model?

a. Men will, on average, make 28.8 percent less money than women.

b. Men will, on average, make 10.859 thousand dollars per year; women will make on average 10.571 thousand dollars per year.

c. Women will, on average, make 25 percent less than men.

d. The difference in income between men and women is not statistically significant at conventional levels.

e. None of these / cannot say

Explanation / Answer

The correct answer is "e. None of these / cannot say."

a. is wrong because the slope value is negative. So, the income of male is more than female. Explaining all these results is required the basic knowledge.

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