Question 1 DemocA records whether candidate A is a democrat

Question 1:

DemocA records whether candidate A is a democrat or not. Similarly, V oteA gives the percentage of total votes that candidate A received. ExpendA and ExpendB record the total amount of campaign expenditure by each candidate in 1000s of dollars.

a) What is the mean share of votes received by candidate A?

b) What is the mean amount of expenditure by both candidates?

c) What is the standard deviation of expenditures?

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Question 2:

a) Using Excel, calculate the correlation between V oteA and ExpendA.

b) What can one conclude about the relationship between these two variables?

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Question 3:

Now calculate the correlation between ExpendA and ExpendB. Is this sign of the relationship as expected?

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Question 4:

Now run the following simple regression using Excel: V oteA = + ExpendA + u.

1. What are the estimated values of ˆ and ˆ?

2. What is the interpretation of the coefficient on ExpendA? Is the sign of this relationship as expected?

3. What is the R2 ? Can one interpret this number?

4. Test the following hypothesis using the t-stat calculated by Excel. Ho : = 0; H1 : 6= 0 What can one conclude about ?

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Question 5:

Now run the following simple regression using Excel: V oteA = + ExpendB + u.

1. What are the estimated values of ˆ and ˆ?

2. What is the interpretation of the coefficient on ExpendB? Is the sign of this relationship as expected?

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Here is the Data Set:

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state	district	democA	voteA	expendA	expendB
AL	7	1	68	328.3	8.74
AK	1	0	62	626.38	402.48
AZ	2	1	73	99.61	3.07
AZ	3	0	69	319.69	26.28
AR	3	0	75	159.22	60.05
AR	4	1	69	570.16	21.39
CA	2	0	59	696.75	193.91
CA	3	1	71	638.69	7.7
CA	5	1	76	616.94	19.25
CA	6	1	73	351.69	50.53
CA	7	1	68	269.89	14.71
CA	11	1	71	269.51	95.57
CA	12	0	52	1440.64	1089.57
CA	16	1	79	252.34	69.56
CA	19	0	50	1470.67	1548.19
CA	23	1	64	140.49	100.96
CA	24	1	72	191.33	15.45
CA	27	1	68	398.6	15.24
CA	30	1	60	460.62	382.11
CA	32	1	67	457.41	20.61
CA	34	1	63	227.1	149.89
CA	36	1	54	532.9	218.7
CA	37	0	64	122.84	13.56
CA	40	0	67	1110.13	47.75
CA	42	0	64	494.49	11.89
CO	1	1	70	217.5	26.04
CO	2	1	63	721.65	85.1
CO	3	1	78	482.79	17.94
CO	5	0	75	183.23	0.93
CO	6	0	63	636.2	489.3
CT	2	1	64	727.92	246.9
CT	4	0	72	372.68	44.41
CT	6	0	66	399.37	128.85
DE	1	1	68	371.75	184.71
FL	1	1	67	210.94	23.91
FL	4	0	50	313.42	1069.7
FL	6	0	54	408.29	503.65
FL	14	1	55	971.88	777.99
FL	19	1	72	337.6	4.91
GA	1	1	67	337.05	40.46
GA	4	1	60	516.74	696.3
GA	5	1	78	101.54	6.05
GA	6	0	59	838.71	358.35
GA	7	1	65	382.28	60.69
GA	9	1	63	405.04	64.4
GA	10	1	64	193.12	6.76
ID	2	1	63	502.08	206.96
IL	4	1	50	359.94	348.34
IL	5	1	61	165.14	48.94
IL	6	0	74	281.23	26.56
IL	9	1	66	122.9	28.32
IL	11	1	65	239.16	41.26
IL	17	1	65	471.23	124.13
IL	19	1	64	193.21	16.24
IL	20	1	69	251.63	57.71
IL	21	1	53	394.41	69.49
IN	2	1	53	444.42	332.88
IN	5	1	56	689.09	244.99
IN	6	0	73	333.72	11.74
IN	8	1	62	551.48	130.24
IN	10	1	61	35.79	24.92
IA	5	0	64	420.73	115.7
IA	6	0	64	523.11	175.95
KS	2	1	73	388.87	119.26
KS	3	0	74	234.58	13.48
KS	4	1	64	545.76	149.04
KY	2	1	61	8.4	84.1
KY	3	1	70	371.43	4.93
KY	4	0	74	468.87	23.64
KY	7	1	59	411.7	432.4
ME	2	0	66	202.32	68.39
MD	3	1	73	354.7	18.89
MA	4	1	60	343.1	34.37
MA	5	1	84	344.93	15.4
MA	6	1	70	337.2	63.01
MA	10	1	67	235.95	121.06
MI	2	0	54	876.78	750.49
MI	3	1	57	600.94	164.86
MI	4	0	71	323.83	8.58
MI	7	1	76	150.59	1.31
MI	8	1	72	128.4	2.19
MI	9	0	70	450.8	14.87
MI	11	0	60	680.82	415.66
MI	12	1	54	434.2	143.89
MI	14	1	63	137.56	3.54
MI	15	1	64	234.43	7.99
MI	18	1	23	9.46	77.1
MN	2	1	42	152.29	623.78
MN	4	0	28	35.79	216.17
MN	5	0	28	16.92	281.45
MN	6	0	35	100.94	320.22
MN	8	0	25	7.74	157.8
MO	3	0	37	202.52	512.21
MO	6	1	41	198.62	341.34
MO	7	1	47	215.06	338.13
MO	8	1	42	516.24	768.79
MO	9	0	32	9.56	210.84
MT	1	0	39	58.2	250.28
MT	2	1	45	394.1	380.93
NE	1	1	33	96.28	221.53
NE	2	0	49	1158.29	858.76
NV	1	0	36	147.89	652.2
NJ	3	0	48	981.86	678.65
NJ	4	1	34	53.96	252.82
NJ	6	0	38	38.92	123.63
NJ	9	0	32	57.26	403.06
NM	1	1	49	576.68	559.13
NM	3	0	27	41.67	267.63
NY	3	0	43	90.89	364.09
NY	5	1	35	35.63	337.79
NY	15	1	39	162.16	602.94
NY	17	0	16	2.85	170.57
NY	22	1	29	10.43	411.06
NY	23	0	38	174.79	273.51
NY	24	1	28	15.94	151.28
NY	27	1	43	645.12	594.97
NY	30	0	43	310.7	802.89
NY	31	1	47	453.46	688.38
NC	1	0	35	16.76	82.15
NC	4	0	42	745.73	1006.64
NC	5	0	47	718.02	756.11
NC	6	1	38	583.01	738.09
NC	8	0	48	242.78	581.89
NC	10	1	39	44.33	302.21
ND	1	0	29	1.15	143.21
OH	2	1	28	13.96	125.68
OH	6	1	26	43.49	884.75
OH	9	0	19	47.94	244.03
OH	11	0	38	860.77	561.07
OH	14	0	25	13.24	419.01
OH	15	1	25	6.68	211.96
OH	17	0	23	2.39	96
OH	19	0	30	0.52	226.09
OK	1	1	48	253.59	484.58
OK	2	0	35	81.63	358.7
OK	5	1	28	0.3	318.82
OR	4	0	28	58.56	279.81
PA	1	0	24	1.64	234.96
PA	3	0	37	23.1	250.48
PA	6	0	37	12	121.43
PA	7	1	32	203.58	507.36
PA	8	0	43	507.68	1089.61
PA	13	1	33	60.67	225.41
PA	15	1	43	355.02	752.33
PA	23	1	38	106.46	336.67
RI	1	1	44	801.29	385.4
SC	1	1	36	82.04	118.7
SC	3	0	46	354.58	641.43
SC	4	0	48	630.91	1143.35
SD	1	0	28	199.42	632.1
TN	6	0	24	12.62	454.35
TX	1	0	38	94.48	505.61
TX	5	0	39	179.2	646.22
TX	6	1	32	17.41	654.26
TX	13	0	48	476.22	384.74
TX	14	0	47	645.99	600.11
TX	23	0	35	6.36	187.3
TX	26	1	31	189.78	314.9
UT	1	1	40	391.93	426.9
UT	2	0	43	254.82	676.47
VA	1	1	27	30.3	284.7
VA	10	1	32	241.45	758.36
WA	1	1	45	625.93	1321.02
WA	3	0	50	354.14	684.21
WA	5	0	24	13.53	476.46
WA	6	0	32	37.62	288.17
WA	8	1	29	12.6	300.05
WV	1	0	25	15.22	103.15
WV	4	0	39	32.04	152.27
WI	3	1	32	22.63	359.8
WI	5	0	36	197.46	1278.53
WI	7	0	38	202.59	450.72
WI	8	1	30	14.42	227.82

Solution

Q1. a) Mean Share received by Candidate A = 50.50289 b) Mean Both Candidates A,B = 307.8498 c) S.D of expenditures = 306.278 Q2. voteA expendA voteA 1.000 expendA .395 1.000 173 sample size ± .149 critical value .05 (two-tail) ± .195 critical value .01 (two-tail) b) r = 0.395, Positively Correlated Q3. a) expendA expendB expendA 1.000 expendB .374 1.000 173 sample size ± .149 critical value .05 (two-tail) ± .195 critical value .01 (two-tail)