Assessment 1: Net worth dynamics through ordinary least square regression analysis Applied Econometrics Methods Assessment 1 Investigating net worth dynamics through ordinary least square regression analysis Total Marks: 100 1|P a g e Applied Econometrics Methods - 178.724 Assessment 1: Net worth dynamics through ordinary least square regression analysis 1. INTRODUCTION In this assessment, you are required to submit a report on data analysis on net worth (which is also called net wealth and is equal to total assets minus total debts) and number of key variables of interest. The dependent variable is net worth that should be studied using ordinary least square models. For reference, please refer to “When It Rains It Drains: Psychological Distress and Household Net Worth” paper available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3521323 . Please do not try to replicate the complete paper. The data provided for the assignment is a simulated data similar to the data used in this paper. So, you might not get same sample size or coefficients. Also, not all variables from the paper are available to keep the assignment simple. Use this paper to get ideas regarding data analysis and report writing. Please focus on the lecture notes, practical exercises and case studies while using the given data set. The complete data is provided in the attached “Assessment1_data.csv” file. The variables description is provided in Table 1 in appendix. 2. ASSIGNMENT REQUIREMENTS 1. You will need to describe the raw data through tables and graphs, providing initial insights of the data. 2. You should use net worth as dependent variable. 3. You can focus on one or two key independent variables, such as psychological distress, for the analysis and use other independent variables provided as control variables. Or if you prefer, you can take other control variables as key variables to focus on. 4. You will have to select the appropriate regression models. After running the regressions, you should provide technical and logical interpretation of the parameters related to coefficients and model fit. 5. You should conduct CLRM tests and discuss the possible reasons when a test fails. 2|P a g e Applied Econometrics Methods - 178.724 Assessment 1: Net worth dynamics through ordinary least square regression analysis 6. Copy pasting codes, explanations and discussions from lecture notes and practical would not be helpful in getting marks. You will need your own arguments backed by references from the literature including textbooks and academic papers. You do not need to provide references on wealth literature, instead you should be focussing on econometrics methods/analytics literature. 7. You should not attempt to populate the report by inserting too many outputs from SAS. It is advised to limit the outcomes presented in the report and to put more focus on correct and insightful interpretation of the results. Using too many outputs from SAS without or improper interpretation of the results affect the overall structure/organization of the report and increases the likelihood of logical and technical mistakes in interpretation/logical reasoning, affecting the overall assignment grades. 3. INSTRUCTIONS • Please refer to Table 2 for grading rubric for this Assignment. • Please submit the report as word file including all the SAS codes that you use in the analysis. You will need to provide SAS code and output for each step. If you decide to put the codes in Appendix, make sure that they are accurately referenced in the right places in the main body of the report. • Please refer to http://owll.massey.ac.nz/academic-writing/formatting-and-layout.php for details on assignment formatting and layout. You can also refer to potential solutions to case studies to get ideas about report format / presentation. • Assignment will go through the plagiarism check. You should provide references to the relevant articles. Inadequate referencing not only affects the grades obtained but also increases the likelihood of plagiarism that may result in your assignment not being awarded any marks. In serious cases, it can result in even more serious disciplinary action by the University. Please refer to Course Guide for further details on plagiarism and other rules. • Please refer to http://owll.massey.ac.nz/main/referencing.php for details on APA style referencing. 3|P a g e Applied Econometrics Methods - 178.724 Assessment 1: Net worth dynamics through ordinary least square regression analysis 4|P a g e Applied Econometrics Methods - 178.724 Assessment 1: Net worth dynamics through ordinary least square regression analysis Appendix Table 1: Variables description Variable name (variable name in data set) Variable description Variable type Dependent variable Net worth (wealth) Captures the values of assets minus debts, where positive net worth means surplus wealth and negative net worth means deficit wealth. Continuous Key independent variables Psychological distress (pd) Psychological distress interference (pd_interfere) Captures the psychological distress score of the respondents, where higher score means higher psychological distress (maximum score is 24 and minimum score is 0). Captures the extent to which the respondent’s psychological distress interferes with their decision-making ability. The response choices “not at all”, “a little”, “some”, or “a lot” are mapped onto different indicator variables, one for each of the response choices: 0 if not at all interference 1 if a little interference 2 if some interference 3 if a lot of interference Continuous Categorical Control variables Education (education) Captures the respondents’ years of schooling. Continuous Captures the combined labor income of all household Income (income) members (in logs). Continuous Age (age) This variable is equal to the respondents’ age in years Continuous Male (male) Employed (employed) Divorce (divorce) Marriage (marriage) Birth of child (childbirth) Death of family member (familydeath) Lay off (laidoff) It takes the value of one if the respondent is male, and zero otherwise. Equal to one if the respondent is employed, and zero otherwise. Equal to one if the respondent recently experienced a divorce, and zerootherwise. Equal to one if the respondent recently got (re)married, and zero otherwise. Equal to one if a household member recently gave birth, and zero other-wise. Equal to one if a household member recently died, and zero otherwise. Equal to one if the respondent was recently laid off from work, and zero otherwise. Dummy Dummy Dummy Dummy Dummy Dummy Dummy Missed work with illness (missedwork) Captures the total number of weeks of work missed due White (white) Equal to one for “White” ethnicity, and zero otherwise. Dummy Black (black) Equal to one for “Black” ethnicity, and zero otherwise. Dummy Hispanic (Hispanic) Equal to one for “Hispanic” ethnicity, and zero otherwise Dummy Other ethnicity (otherethnicity) College degree (collegedegree) 5|P a g e to illness. Equal to one for reports of ethnicity other than “Black”, “Hispanic” or “White”, and zero otherwise. Equal to one for respondents with college degree. (Other options: No college degree = 5; Did not study in college = 0; No answer = 9) Continuous Dummy Dummy Applied Econometrics Methods - 178.724 Assessment 1: Net worth dynamics through ordinary least square regression analysis Student loan (studentloan) Captures the respondents’ student loan outstanding Socio-economic status (socioeconomic) Captures the respondents’ socio-economic status, where higher score means higher socio-economic status Captures the year of the survey that corresponds to the data being collected for the year. It means that if year equals to 2009 then variables measures dynamics for 2009. Year (year) ID(id) 6|P a g e Captures the unique identifier of the respondents. Continuous Continuous Categorical Categorical Applied Econometrics Methods - 178.724 Assessment 1: Net worth dynamics through ordinary least square regression analysis Table 2: Grading Criteria Criteria Excellent Good Fair Poor Very Poor Data Presentation Up to 15 points The selected descriptive and visual methods of presenting data are highly suitable for the type of data, providing useful preliminary insights. Up to 12 points The selected descriptive and visual methods of presenting data are mostly suitable for the type of data. Up to 9 points The selected descriptive and visual methods of presenting data are fairly suitable for the type of data. Up to 6 points The selected descriptive and visual methods of presenting data are not suitable for the type of data. 0 points Students do not provide descriptive and visual presentation of the data. Up to 50 points Rigorous analysis of the empirical data. Statistical methods are fully and correctly applied. Results and discussion are well focused and highlight the most significant insights. Up to 20 points Clearly defined research objective linked to the research process. Paper is easy to read with clear organization and correct information. Up to 40 points Most statistical methods are correctly applied. Results and discussion include important insights. Up to 30 points Most statistical methods are correctly applied but more could have been done with the data. Results and discussion include some insights, but some important dynamics are missing. Up to 12 points Research objective is defined and somewhat linked to the research process. Better organization needed. Some inaccurate info. Up to 20 points Some statistical methods are applied but with significant errors or omissions. Results and discussion include most basic points with information that is misleading or difficult to interpret. Up to 8 points Research objective is not clearly defined and linked to the research process. Little or no method of organization. Substantial inaccurate info. 0 points No proper statistical methods are applied. Entirely missed the point of the empirical analysis. (up to 15 points) Data Analysis (up to 50 points) Content & Structure (up to 20 points) 7|P a g e Up to 16 points Clearly defined research objective somewhat linked to the research process. A serious effort is made to organize thoughts. Mostly correct info cited. Applied Econometrics Methods - 178.724 0 points No/inappropriate research objective provided. No method of organization. No explanation of the objective of the report. Assessment 1: Net worth dynamics through ordinary least square regression analysis Grammar/Mechanics (up to 10 points) Referencing (up to 5 points) Up to 10 points Adhere to formatting guidelines. Few if any grammatical errors. Great evidence of critical, careful thought and analysis and/or insight. Up to 8 points Minor formatting issues and grammatical errors. Evidence of critical, careful thought and analysis and/or insight. Clarity of purpose generally maintained. Up to 5 points Follows APA style. Uses references of high quality. Comprehensive critical review of the current state of knowledge in own words. Paraphrasing used to convey key concepts. Up to 4 points Minor APA style deviations. Uses adequate references. Somewhat complete, mainly from own perspective, literature is used reasonably well to justify perspective. 8|P a g e Up to 6 points Substantial formatting issues and grammatical errors. Some evidence of critical, careful thought and analysis and/or insight. Some sense of purpose maintained in the report. Up to 3 points Does not use APA style but another style present. Up to 4 points Failed to follow formatting guidelines. Many grammatical errors. Little or no evidence of critical, careful thought analysis and/or insight. Difficult to follow story line. Up to 2 points Haphazard referencing style. List of points or sweeping statements. Large blocks of referenced material. Applied Econometrics Methods - 178.724 0 points Failed to follow formatting guidelines. Too many grammatical errors. No evidence of critical, careful thought analysis and/or insight. No story line. 0 points No referencing.
