The following model was fitted to data on 34 states:

where
ŷ = annual salary of the attorney general of the state
x₁ = average annual salary of lawyers, in thousands of euros
x₂ = number of bills enacted in previous legislative session
x₃ = number of due process reviews by state courts that resulted in overturn of legislation in previous 40 years
x₄ = length of term of the attorney general of the state
x₅ = dummy variable taking value 1 if justices of the state supreme court can be removed from office by the governor, judicial review board, or majority vote of the supreme court and 0 otherwise x₆ = dummy variable taking value 1 if supreme court justices are elected on partisan ballots and 0 otherwise The numbers in parentheses under the coefficients are the estimated coefficient standard errors.
a. Interpret the estimated coefficient on the dummy variable x₅.
b. Interpret the estimated coefficient on the dummy variable x₆.
c. Test, at the 5% level, the null hypothesis that the true coefficient on the dummy variable x₅ is 0 against the alternative that it is positive.
d. Test, at the 5% level, the null hypothesis that the true coefficient on the dummy variable x₆ is 0 against the alternative that it is negative.
e. Find and interpret a 95% confidence level for the parameter b₁.

Transcribed Image Text:

ŷ = -13,878 + 570x₁ +5.01x2-534x3 + 30.7x4 (134.9) (1.609) (237) +5,787x5 (2,834) R² = 0.55 - 2,630x6 (1,630) (219.4)