To answer this question you are required to use the statistical software Stata. Make sure to a do-file with your code, an automated log-file of your answers from that code, and write down in a separate document your answers. You are required to submit all three files (i.e., do-file, log-file, and Word document) in a readable format before the due date. Use the dataset affairs for this exercise (accessible with the bcuse command). affairs contains cross-sectional data on individuals, and you will use this data to investigate the determinants of the number of affairs (and the probability of affairs) within a marriage. A more detailed description of the dataset can be found here: http://fmwww.bc.edu/ec-p/data/wooldridge/affairs.des. 1. Estimate the following model: naffairs = 0 + 1age + u i. Report the estimated coefficients and the p-values of the estimated coefficients from the regression results. Based on these p-values, write down whether the estimated coefficients are statistically significant at the 5% significance level. [3 pts] ii. Is the regression significant? How to perform this test? How this test is related to the t test? [4 pts] 2. Estimate the following model: naffairs = 0 + 1age + 2yrsmarr + u i. Report the estimated coefficients and the p-values of the estimated coefficients from the regression results. Based on these p-values, write down whether the estimated coefficients are statistically significant at the 5% significance level. [3 pts] ii. Provide the econometric and economic intuition of the reason why there is a change in the sign on the estimated coefficient of age ( 1). [4 pts] 3. Estimate the following model: naffairs = 0 + 1age + 2yrsmarr + 3relig + u 2 i. Report the estimated coefficients and the p-values of the estimated coefficients from the regression results. Based on these p-values, write down whether the estimated coefficients are statistically significant at the 5% significance level. [3 pts] ii. Provide the econometric and economic intuition of the reason why there is a change in the significance level of the estimated coefficient of age ( 1). [4 pts] 4. Estimate the following model: naffairs = 0 + 2yrsmarr + 3relig + 4educ + 5occup + 6male + 7kids + u i. Report the estimated coefficients and the p-values of the estimated coefficients from the regression results. Based on these p-values, write down whether the estimated coefficients are statistically significant at the 5% significance level. [3 pts] ii. Perform an F test to verify whether educ, occup, male, and kids are jointly significant and provide the results. [4 pts] 5. Estimate the following model: naffairs = 0 + 2yrsmarr + 3relig + 8ratemarr + u i. Report the estimated coefficients and the p-values of the estimated coefficients from the regression results. Based on these p-values, write down whether the estimated coefficients are statistically significant at the 5% significance level. [3 pts] ii. Given the variables available in the data set, do you consider this model to be complete? Which other test would you perform to be sure that you do not need to add any other explanatory variables? [4 pts] 6. Re-do 1. to 5. using as a dependent variable affair. Note that affair is a binary variable that equals one if the individual had at least an affair and zero otherwise. i. Comment if the qualitative results obtained in 1.-5. are still in place. Note that you do not need to show all the coefficients, it is enough to comment on any relevant difference. [3 pts] ii. As you can see on Section 7-5 of the Textbook, when the dependent variable y is binary then you are estimating a linear probability model. This is the case because E(y|x1, x2, . . . , xk) = Probability(y = 1|x1, x2, . . . , xk), which implies that Probability(y = 1|x1, x2, . . . , xk) = 0 + 1x1 + 2x2 + + kxk. Thus, using the variable affair you are estimating the probability that an individual will have at least an affair. Focus one more time on the model, affair = 0 + 2yrsmarr + 3relig + 8ratemarr + u 3 Which is the value of 0 + 2 + 3 + 8? Provide the exact economic interpretation of 0 + 2 + 3 + 8. [6 pts] iii. Which is the probability that a very religious individual with 12 years of a very happy marriage has an affair? [6 pts]