Question
Belle also recently heard in the media that the proportion of sales are as follows: 20% of sales are located in the Eastern Suburbs; 20%
Belle also recently heard in the media that the proportion of sales are as follows:
20% of sales are located in the Eastern Suburbs;
20% of sales are sold in the Northern Suburbs;
5% of sales are located in Sydney CBD;
30% of sales are located in the Western Suburbs and;
25% of sales are located in the Southern Suburbs.
Belle would like to know if the sample data is statistically different to what the media is suggesting. Remember to state your assumptions and limitations of the result.
In addition to this, Belle would like better understand if housing cost is a problem amongst low income earners i.e. household that earn less than $60,000 and older individuals. To begin, Belle would like you to run a simple linear regressions with:
hcost as the dependent variable; and
age as the independent variable.
As part of your reporting, you need to interpret the coefficients of the model and discuss whether they are economically and statistically significant.Also report the confidence interval of dependent variable and interpret the results.
Next, Belle wants you to run a multiple linear regression. As part of this exercise you need to:
Explain why a multiple linear regression is beneficial i.e. justify the need for multiple linear regression and the issues associated with running a simple linear regression. Contextualise it in the context of the current problems are there confounding factors which motivate you to do this?
Associated with this think about the what type of model you'd like to use e.g. level-level, log-level, log-log or level-log model for each of the considered variables. You need to justify this.
Run the model with the following independent variables:
oPtype
olocation
oInternal size;
oCarspace;
oMarital status;
oage; and
and hcost as the dependent variable. You should also construct at least one interaction variables but it must make sense and must be justified. Creativity will be rewarded if you do this and you (i) construct it correctly, (ii) justify it and (iii) provide an interpretation of this variable.
As part of the reporting requirements for the multiple linear regression:
Interpret the coefficients.
Define and comment whether each of the coefficients arestatistically significant.Remember to state your assumptions.
Define and comment whether each of the coefficients areeconomically significant.Remember to state your assumptions. You'll also need to define what is economically significant and use a benchmark to determine this.
Limitations and issues with your model. If you decide to use technical terms e.g. multicollinearity, homoskedasticity, bias, consistency etc.you need to explainwhat these terminologies are andplace them in the context of your problemandhow it will affect your results.
The question which you need to help the government answer is (1) whether low income earners do face more financial stress and (2) whether older people face more financial stress.
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