drugs to people to decrease their cholesterol level. Health professionals also collected a sample of people, who did not have the drug, to act as a control group. Health professionals then measured cholesterol level of all individuals in year 1, before any cholesterol drug were given out, and then measured the same group of individuals again in year 2 after the cholesterol drugs had been administered. Consider the following model to evaluate the effectiveness of the drug on people's cholesterol level: cholie = Bo + 8,d2, + B1drugie + vịt chol= cholestrol of individual i, in year t d2;= binary variable equal to 1 if the time period is year 2, and 0 otherwise drug= binary variable equal to 1 if individual i took the drug in year t, and 0 otherwise Vi= composite error consisting of the unobserved, time-constant effect (a;) and the idiosyncratic error (ut) Suppose a researcher in the group suggests simply pooling the cross sections from year 1 and year 2, and estimating the model by running an OLS regression on the pooled cross-sectional data set. Which of the following factors, captured by ai, would cause this pooled OLS strategy to yield biased and inconsistent estimates of ß1, the effect of the drug on the cholesterol level of individuals? Check all that apply. Your answer: O Health professionals systematically give the drugs to individuals who are genetically predisposed to have low cholesterol level. O Health professionals systematically give the drugs to individuals who are genetically predisposed to have high cholesterol level. O Health professionals randomly assign the drugs to individuals, independent of the unobserved heterogeneity among individuals. O Health professionals systematically give the drugs to individuals older than 55. O Health professionals systematically give the drugs to women.
drugs to people to decrease their cholesterol level. Health professionals also collected a sample of people, who did not have the drug, to act as a control group. Health professionals then measured cholesterol level of all individuals in year 1, before any cholesterol drug were given out, and then measured the same group of individuals again in year 2 after the cholesterol drugs had been administered. Consider the following model to evaluate the effectiveness of the drug on people's cholesterol level: cholie = Bo + 8,d2, + B1drugie + vịt chol= cholestrol of individual i, in year t d2;= binary variable equal to 1 if the time period is year 2, and 0 otherwise drug= binary variable equal to 1 if individual i took the drug in year t, and 0 otherwise Vi= composite error consisting of the unobserved, time-constant effect (a;) and the idiosyncratic error (ut) Suppose a researcher in the group suggests simply pooling the cross sections from year 1 and year 2, and estimating the model by running an OLS regression on the pooled cross-sectional data set. Which of the following factors, captured by ai, would cause this pooled OLS strategy to yield biased and inconsistent estimates of ß1, the effect of the drug on the cholesterol level of individuals? Check all that apply. Your answer: O Health professionals systematically give the drugs to individuals who are genetically predisposed to have low cholesterol level. O Health professionals systematically give the drugs to individuals who are genetically predisposed to have high cholesterol level. O Health professionals randomly assign the drugs to individuals, independent of the unobserved heterogeneity among individuals. O Health professionals systematically give the drugs to individuals older than 55. O Health professionals systematically give the drugs to women.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A group of health professionals produced a cholesterol drug. To measure the effectiveness of this drug they implemented a program that offered free
drugs to people to decrease their cholesterol level. Health professionals also collected a sample of people, who did not have the drug, to act as a control
group. Health professionals then measured cholesterol level of all individuals in year 1, before any cholesterol drug were given out, and then measured
the same group of individuals again in year 2 after the cholesterol drugs had been administered.
Consider the following model to evaluate the effectiveness of the drug on people's cholesterol level:
cholie = Bo + 8od2, + B1drugit + Vịt
chol= cholestrol of individual i, in year t
d2;= binary variable equal to 1 if the time period is year 2, and 0 otherwise
drug= binary variable equal to 1 if individual i took the drug in year t, and 0 otherwise
V= composite error consisting of the unobserved, time-constant effect (a;) and the idiosyncratic error (ui)
Suppose a researcher in the group suggests simply pooling the cross sections from year 1 and year 2, and estimating the model by running an OLS
regression on the pooled cross-sectional data set.
Which of the following factors, captured by ai, would cause this pooled OLS strategy to yield biased and inconsistent estimates of ß1, the effect of the
drug on the cholesterol level of individuals? Check all that apply.
Your answer:
O Health professionals systematically give the drugs to individuals who are genetically predisposed to have low cholesterol level.
O Health professionals systematically give the drugs to individuals who are genetically predisposed to have high cholesterol level.
O Health professionals randomly assign the drugs to individuals, independent of the unobserved heterogeneity among individuals.
O Health professionals systematically give the drugs to individuals older than 55.
O Health professionals systematically give the drugs to women.
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