E5.3 On the text website, www.pearsonglobaleditions.com/Stock_Watson, you will find the data file Birthweight_Smoking, which contains data for a random sample of babies born in Pennsylvania in 1989. The data include the baby’s birth weight together with various characteristics of the mother, including whether she smoked during the pregnancy.2 A detailed description is given in Birthweight_Smoking_Description, also available on the website. In this exercise you will investigate the relationship between birth weight and smoking during pregnancy.

a. In the sample:

i. What is the average value of Birthweight for all mothers?

ii. For mothers who smoke?

iii. For mothers who do not smoke?

b. i. Use the data in the sample to estimate the difference in average birth weight for smoking and nonsmoking mothers.

ii. What is the standard error for the estimated difference in (i)?

iii. Construct a 95% confidence interval for the difference in the average birth weight for smoking and nonsmoking mothers.

c. Run a regression of Birthweight on the binary variable Smoker.

i. Explain how the estimated slope and intercept are related to your answers in parts

(a) and (b).

ii. Explain how the SE(b n

1) is related to your answer in b(ii).

iii. Construct a 95% confidence interval for the effect of smoking on birth weight.

d. Do you think smoking is uncorrelated with other factors that cause low birth weight? That is, do you think that the regression error term, say ui, has a conditional mean of zero, given Smoking (Xi)? (You will investigate this further in Birthweight and Smoking exercises in later chapters.)