1. Use the data in HAPPINESS for this question. See also Computer Exercise C15 in Chapter 13.
(i) Estimate a probit probability model relating
vhappy
to
occattend
and
regattend, and include a
full set of year dummies. Find the average partial effects for
occattend
and
regattend. How do
these compare with those from estimating a linear probability model?
(ii) Define a variable,
highinc, equal to one if family income is above $25,000. Include
highinc,
unem10,
educ, and
teens
to the probit estimation in part (ii). Is the APE of
regattend
affected
much? What about its statistical significance?
(iii) Discuss the APEs and statistical significance of the four new variables in part (ii). Do the estimates make sense?
(iv) Controlling for the factors in part (ii), do there appear to be differences in happiness by gender or race? Justify your answer.