1. In the sheet entitled "Law Schools", you'll find data on the median starting salaries of graduates from a sample of law schools, along with numerous characteristics of the graduates and law schools, including the law school's rank. The object of this exercise is to determine the effect of a law school's rank on the median starting salary of its graduates. The effect of rank is not likely to be the same across the distribution of rankings. For example, the average difference in the median starting salaries between graduates from top 10 schools and middle-ranked schools is likely to be different from the average difference in median starting salaries between graduates from middle-ranked schools and those from low-ranked schools. Thus, we will use dummy variables of ranking brackets instead of the rank variable. Descriptions of the variables can be found in the sheet entitled "Law Schools Codebook." Using the "rankcode" variable, create dummy variables for 5 of the 6 ranking brackets, treating schools ranked below 100 as the reference group.

A. Estimate a regression equation for median starting salary with the following independent variables: the ranking dummies, the median LSAT score of graduates, the median college GPA of graduates, number of volumes in the library, and the cost of the law school. Present the regression estimates in the appropriate table. (4 points)

B. Are the coefficients on the ranking dummies statistically significant? If so, interpret their effect (3 points).

C. Are any of the other independent variables statistically significant? If so, discuss their effects. (3 points)

D. What is the overall story told by the results? (5 points)

Variable Name	Description
salary	Median starting salary for law school's graduates
rankcode	Law school ranking category. 1 = schools ranked below 100, 2 = schools ranked 61 to 100, 3 = schools ranked 41 to 60, 4 = schools ranked 26 to 40, 5 = schools ranked 11 to 25, 6 = top 10 schools
LSAT	Median LSAT score
GPA	Median college GPA
libvol	number of volumes in library, 1,000's
cost	law school cost

salary	rankcode	lsat	gpa	libvol	cost
31400	1	155	3.15	216	8340
33098	1	160	3.5	256	6980
32870	4	155	3.25	424	16370
35000	3	157	3.2	329	17566
33606	2	162	3.38	332	8350
31700	2	161	3.4	311	8350
30410	1	155	3.16	220	6020
30150	1	152	3.12	230	5986
31300	1	155	3.12	230	4785
33200	2	160	3.66	157	7680
34900	3	165	3.55	320	17720
55413	5	163	3.42	470	16160
33750	2	162	3.6	330	6300
65000	6	167	3.7	600	11387
62000	5	163	3.55	542	12478
63000	5	165	3.57	470	12202
31300	1	156	3.2	208	15700
28500	1	156	3.2	147	11750
30100	1	154	3.25	215	12927
33650	2	160	3.3	352	16545
40325	3	158	3.3	305	16680
70000	6	168	3.75	555	19392
32800	2	162	3.37	339	11268
35000	2	164	3.31	280	12537
78325	6	168	3.6	735	20518
67500	6	163	3.55	400	19200
29800	1	156	3.1	210	13850
28900	1	155	3.2	208	13384
42300	3	158	3.2	275	15221
32900	2	158	3.27	312	14115
34500	2	155	3.3	190	12500
32300	2	155	3.23	240	13780
60172	6	169	3.7	450	19016
46103	3	163	3.4	260	17170
33900	2	158	3.3	346	11400
64880	5	163	3.3	410	17900
29336	1	154	3	186	12100
61000	4	163	3.51	403	17650
62705	5	166	3.52	728	18995
45889	3	163	3.4	456	7221
34130	2	158	3.14	200	14554
34400	2	154	3.16	197	13175
67815	6	168	3.75	1745	18364
30580	1	160	3.42	231	7820
51082	4	158	3.25	395	16740
39000	3	159	3.3	400	7300
29500	1	152	2.85	240	9625
27000	1	152	3.25	146	6810
40000	4	161	3.4	593	12622
50000	4	160	3.49	510	12382
31000	1	159	3.3	410	11588
26000	1	140	3.15	161	7225
63000	5	159	3.49	727	10190
30000	1	158	3.2	280	13200
36000	2	159	3.43	325	6996
33000	2	160	3.3	329	9738
29750	1	161	3.2	325	13900
34750	2	156	3.35	540	4247
33900	2	157	3.2	236	9639
35000	2	160	3.24	285	13950
39000	4	161	3.35	341	16604
29640	1	152	3.1	230	14663
39500	4	157	3.2	220	12600
38000	3	160	3.35	325	13245
42000	4	157	3.24	285	15114
30150	1	154	3.2	246	7504
30000	1	157	3.1	252	13800
39900	1	155	3.2	392	17310
65000	6	168	3.67	750	19575
49862	5	163	3.56	800	12949
40591	3	153	3.3	260	6268
34750	2	153	3	220	10500
36900	2	154	3.28	245	12133
29750	1	155	3.2	124	9292
34000	2	156	3.4	304	8700
29500	1	152	3.07	242	11150
29500	1	158	3.2	350	8274
34700	2	154	3	377	16670
28800	1	152	3.22	250	6755
28900	1	159	3.23	165	16860
30000	1	157	3	200	6512
67000	5	162	3.6	557	18170
53177	4	161	3.45	340	16400
29699	1	156	3	225	16960
41300	4	161	3.5	590	12200
34800	2	154	3.28	262	9198
27000	1	151	3.03	216	10850
39000	3	160	3.5	291	12680
26000	1	159	3.3	280	16310
65000	6	165	3.7	540	19767
24900	1	146	3.38	211	2623
28000	1	159	3.3	301	13800
30135	1	161	3.23	216	14040
37600	2	157	3.22	450	10638
39800	3	161	3.39	393	10653
36000	2	158	3.2	409	15500
35000	2	156	3.3	400	13520
41000	3	160	3.25	320	16480
39000	3	159	3.17	245	15800
38750	1	159	3.32	210	15540
34700	2	155	3.16	316	15870
30000	1	157	3.2	326	10546
29650	1	156	3.24	156	6910
29500	1	155	3	290	12600
52000	4	164	3.5	330	17430
30050	1	156	3.3	302	9186
39000	3	159	3.18	440	17372
34900	2	157	3.15	340	16240
63000	6	167	3.78	414	18186
29000	1	158	3.3	300	14340
41000	3	155	3.2	319	17348
41150	3	157	3.3	439	13300
59500	5	163	3.5	850	8640
35500	1	157	3.1	260	4388
29600	1	157	3.1	260	10280
25000	1	152	2.8	310	14470
36000	2	155	3	260	8715
49000	4	161	3.55	264	8529
35000	2	155	3.3	215	13710
57000	5	164	3.62	329	17750
29669	1	159	3.2	175	15114
37000	2	160	3.41	420	15620
64000	5	164	3.6	700	15678
29700	1	162	3.31	250	14200
35000	1	154	3.27	251	7000
49000	5	163	3.63	450	10000
51490	5	163	3.47	297	13600
41500	3	160	3.2	476	17750
35000	2	158	3.35	415	6700
27900	1	153	3.08	301	11775
29630	1	155	3	230	15960
29750	1	154	3.1	481	14200
36000	2	157	3.2	244	12800
49321	5	162	3.34	300	13530
31500	1	157	3.4	174	7396
69000	6	171	3.82	850	19780