Version:0.9
StartHTML:0000000105
EndHTML:0000001389
StartFragment:0000000141
EndFragment:0000001349
Junction
is a small town with two suburbs. The data file “Major Project – Data Set” contains data on 555 houses
sold in Junction between 2016 and 2021. This data includes the price at which the house was sold, which of two
agents sold the house (all houses are sold through an agent by law), the year in which the house was sold as well
as data on various characteristics of each house sold (age, size, number of stories etc.). These characteristics serve
as possible explanatory variables of sale price.
Quantitative Methods (M), (UAC) & (H) Semester 2, 2022 Major Project Project Instructions • The project is separated into 4 interrelated tasks. All 4 tasks are due at the same time and should be prepared as a single report. The final report due date is Friday the 4th of November at 5pm Adelaide time (GMT +09:30). Please submit your reports online via MyUni by uploading a single file in Microsoft Word format (either .doc or .docx) through the Assignments tab and associated link. • Tasks 1, 2, 3 and 4 are most closely related to Topics 2, 8 and 9 as detailed in the course outline. • This is an individual project (you can discuss it with other students but everyone needs to make an individual report submission). • The project comprises 50% of your final Quantitative Methods (M) grade. The Grading Rubric is also available on MyUni, giving additional detail on the assessment breakdown: ▪ Headline Regression Model Derivation 10% ▪ Task 1: Data Summary 15% ▪ Task 2: Regression Model – Build and Use 40% ▪ Task 3: Regression Model – Evaluation 15% ▪ Task 4: Further Practical Implications 15% ▪ Report Structure and Written Presentation Quality 5% • Your final report will be processed through Turnitin as a check for plagiarism so please ensure that you only present your own work. In addition, your final report needs to meet all of the following criteria: ▪ Font: Times New Roman ▪ Font size: 12 point ▪ Page margins: 2.54cm all around (Normal) ▪ Page Limit: 8 pages only (A4, single sided). The page limit should not be exceeded for any reason (i.e., not for appendices, raw data, STATA coding) Appropriate font, font size, page margins, and page limit are all graded against ‘Report Structure and Written Presentation Quality’ (5%). • Further Advice: ▪ In total, your title, table of contents, and a short introduction should take 1 page (max). ▪ Ensure your report is free from spelling and grammatical errors. ▪ Ensure your report is clear and well-structured. ▪ Ensure your report is written in context and answers questions in context. ▪ Make sure it is clear which model is your “Headline Regression Model” (Final answer) 1 Junction is a small town with two suburbs. The data file “Major Project – Data Set” contains data on 555 houses sold in Junction between 2016 and 2021. This data includes the price at which the house was sold, which of two agents sold the house (all houses are sold through an agent by law), the year in which the house was sold as well as data on various characteristics of each house sold (age, size, number of stories etc.). These characteristics serve as possible explanatory variables of sale price. Data definitions follow: OBS = observation AGE = age of house in years SHOPS = 1 if house is close to a shopping precinct, 0 otherwise CRIME = crime rate of the suburb within which the house is located TOWN = distance in kilometres to the town centre STORIES = number of dwelling stories OCEAN = 1 if house has an ocean view, 0 otherwise POOL = 1 if house has a pool, 0 otherwise PRICE = price at which the house was sold (in dollars) AGENT = selling agent – “W&M” (0) or “A&B” (1) SIZE = size of the house in square metres SUBURB = Mayfair (0) or Claygate (1) TENNIS = 1 if house has a tennis court, 0 otherwise SOLD = year of last sale (2016 to 2021) Your tasks Task 1 – 15% of project grade (recommended length: 1.5 pages) You are required to provide a comprehensive summary of the data set contained in the “Major Project – Data Set” file. How you choose to do this is entirely at your discretion. However, it is recommended that you consider using both summary statistics and graphical methods while also noting any peculiarities within the data set. Task 2 (including Headline Regression Model) – 50% of project grade (recommended length: 3 pages) You have been hired by Joy, the wealthy owner of a house on Elm Street in Junction (not included in the data set) to predict the price at which her house will sell. Her house has two stories, is in Claygate, is 178 square metres large, is not near a shopping precinct and is 10 km from the town centre. She estimates that the house is about 10 years old and in a low crime area according to her experiences. Joy inherited the house from her uncle and is therefore unsure when it was last sold. Some other features of the property can be seen below: 2 You are expected to build a regression model of house prices. In doing so, make sure that you use an appropriate number of predictors to develop your estimates. Once you have constructed an appropriate model, use it to obtain and provide for Joy’s house: 1. A point prediction of the sales price which it can be expected to fetch 2. A 95% interval prediction for this sale price 3. An estimate of the marginal effect of house size on this sale price 4. Financial advice on whether Joy should use “W&M” or “A&B” to sell her house. “W&M” charges a commission of 2.5% whereas “A&B” charges a commission of 3.5% of the final sale price. Joy, who claims to have some knowledge of regression analysis, has stressed that she thinks you should use a regression model with an R2 of at least 88%. Note: Task 1 directed you to take note of any peculiarities in the data set. There are other additional errors in the data set that you may not have picked up on in Task 1. These will only become clear to you once you start working on Task 2. Several problems can result if you fail to handle these issues correctly, so be mindful to address them, both in your regression application as well as your final report. If resolving any of the errors in the dataset requires you to make assumptions, make sure to clearly state your reasoning and approach in your report. Task 3 – 15% of project grade (recommended length: 1.5 pages) Please provide a reflective discussion on how you executed Task 2 of the project above. Specifically consider the following: 1. Verify that your regression model does not suffer from any misspecification errors and provide the relevant regression diagnostics which support your findings. 2. If you found that your model is in fact partially misspecified in part (1) of Task 3 above, explain what you did to ensure that the misspecification only has a minimal impact on your results in Task 2 above. That is, explain how you corrected any misspecifications that occurred during your modelling. 3. Were there any other oddities in the data set or your model? Explain. 4. Is there anything else worth mentioning which is relevant to your work or to your results for Joy? Task 4 – 15% of projected grade (recommended length: 1 page) Sometimes in quantitative research methods, the regression model can be prone to endogeneity problems. Specifically, the explanatory variable(s) may be influenced by the dependent variable or both may be jointly influenced by an unmeasured third variable. Given these endogenous relationships, in this task, you need to discuss another model that can be developed utilizing the given data set. Particularly, you need to provide an explanation as to what relationship you are trying to explore, what is the underlying reasoning for the relationship, what variables will be employed in the model, and how exploring this relationship can have practical implications. Finally, ensure that you provide sufficient discussion on the choice of variables that you wish to include in the model. Note: You do not need to execute the empirical model for this task. Sheet1 OBSAGESHOPSCRIMETOWNSTORIESOCEANPOOLPRICEAGENTSIZESUBURBTENNISSOLD 1503601003785581154002018 21413601003243520131002019 31733601003556410144002016 41613601104107551157002019 51413601004772510202002017 62113601014023230163012020 71501301003343630126102016 82003601004177011153002019 9913601004271621171002016 101423601003948071171002018 111403601003096930119002020 121621302104455370150102017 131413601003125030116012020 141413601003349130134002017 15833601003832610148002018 161433601014520081163012019 171911301003893150145102017 181831301105418130188102020 191823601004439360166002020 20170360100240305089012017 211323602104677980155002017 22523601004588231191012020 231303603004231541168012019 241623601004136890174002017 252103601003688670143002018 261113601003916021161002019 271623601014084850167002018 281423601003870820147002018 291513601003741840148002020 301313602003918320157002017 311723601014039070161002020 321511301004292340157102019 331313601004315060175002018 34613601003938450162002019 351513601004073090151002019 361333601003885341171002020 371313601003958020158002020 381411301004545970162102017 391613601003514630141002019 401523601003418141136002020 411411301004203210180102016 421623601003917220167002016 431923601004483860204002016 441513601105091140192002018 451513601004209720173002020 461121301004357630169102019 471411301004460061146102019 481611301115895311182102019 491523601114697290155002020 501721301013737640136102020 51621301003924730146102020 521303601003254210129002020 531803602003905830164002020 541403601003714260172002021 552023601003958050148012019 561413601003307940131012016 571823601004559840187002018 581413601013726420145002018 591203602104946780171002017 601503601003534230151002020 611513601004371500165012017 621613601003829361158002016 631511301105008090155112017 641421301104004880135102020 651803601014144810160002017 661813601105078820154012018 671521302004593541160102020 681211301003653030150102017 692123602004222860147002019 701713601004227850158002020 711713601003756160157002018 721521301004095440160102016 732121301003900190143112017 741613602003962870164002016 751113601014027590172012019 761521301004416980174102020 771903602013298370134002017 781713601004548890175002021 791313601013839920137002020 80513601004169511169002021 811713601004563451184012020 821511302004470300167102017 831611301004101301135102016 841111301105157770186102017 851323601004545870186002019 861411301004690380196102018 871523601004488060198002017 881423602004360550184002017 891701301003918871133102016 901613601003600300140002016 911411301004534220201102021 922113601004314531181002017 931623602003519740142002016 941311301004014780161102017 951613601003949280164002020 96603601004212060173002021 971413601004274981183002019 981503601004760950203002017 991511301003389540119102016 1001711301004230550160102018 101303601103881070146002021 1021703601106904830281002018 1031723601014692120181012020 1041003602013757831150002021 1051413601104879400179002017 1061513603014420070170012016 1071323601004152330160002018 1081723601004025120170002020 1091213601003146550131002017 1101303601003641740174002021 1111103601004650490172002018 112803601004920681209002018 113903601004368460190002018 114801301104521230142102020 1151613601004313260180002018 1161503601003766941147002016 1171913601003204940117002020 1181413601004517031197002016 1191703602104647150157002018 1201413601004875371216002017 1211503601004588161185002017 122711301105153850184102018 1231223602003751320157002017 1241503601014319650168002018 1251413601004055540161012018 1261413601005028510207002017 1271503602105428690195002021 1282913601003675801159002019 1291431301003678210135102019 1301621302004156491143102020 1311423601104132930143002018 1321011301003529140132102020 1331303601004136290158002019 1341513601003236440139002018 1351413601104029711137002018 1361413601104590191150012021 1371423601003835930156002020 1381501302004729390167112018 1391401301013700020151102017 1401603601003617950134002019 1411513602104474100147002019 1421611301104513130163102020 1431313601003366300138002021 1441513601104539860155002017 1451413602004339441168002018 1461803601003860130156002019 147911301003426460126112021 1481133602105488640210002019 1491701301014346890160102018 1501423601003867200147002017 1512623601004244890189002018 1521823601003645990148002019 1531423601004108020160002021 1541313601003265280131002016 1551521301004977671179102016 1561533601104471450153002018 1571613601004268930165002020 1581523601003812091153002020 1591413601003662330160012017 1601511301114461960149102017 1611213601004715421198002017 1621413601004255690180012017 163923601004240920182002019 1641311301104119880133102019 1651203601004151860176012019 166911301014507970157102018 1671613601004092860172002020 1681533601004585930174002019 1691613601003912270155002020 170903601004182181165002017 1711613601003163490125002020 1721421302004766640187102018 1731801301105120640165102018 1741113601003182300116002020 1751523601004371120175002019 176713601004071640163002016 1771301301004079801123112020 1781613601003940490156002019 1791613601004108851162002017 1801603601004316451179002017 1811201301013920690153102019 1821411301003771650154102016 1831321301004881431158102018 1841413602003119390126002021 1851711301005001241186102019 1861523601003473190138012018 1871533601013730370150002016 1882313601003773801146002020 1891803601004800000223002021 190503601004173040160002019 1911413601005043450215002016 192503601014355510163002019 1931423601003320370128002021 1941611301114742430152102017 1951223602104921360175002019 1961413601003726410148002019 1971213601003918981164002019 198703602013539110150002020 1991413601003743910150002018 2001411301003915920141102018 2011323601004856720189012018 202823601004096451150012017 2031723601106126280217002017 2041311302003890231129102021 2051603601004012720170002020 2061001301004850631161102018 2071001301014076730157102019 2081611301003800960146102016 2091011302004278871135102020 2101523601003807540162002019 2111613602004020250159002019 2121711301004448430181102019 2131703601003331031134002018 2141603601104431401158002020 2151823601003621291142002017 2161313601003864350154002016 2171423601004792651200002018 2181613601105522670214002020 2191313601003121041121002016 2201603602004585520173002020 2211913601003811150143002018 222703601003749120146012016 2231503601003403560139002019 2241711301004065650148102018 2251603601004099300160012016 2261713601003998430162012020 2271611301004917941173102018 228403601003975060158002020 2291623601003531840143002017 2301511301014468811130102018 2311501302003735970142102017 2321423601004432961172002018 2331411301104223860133102017 234713602014266170178002016 235723601013649770133002016 2361203601013741470138002017 2371523601004035810151012020 2381511301015954251224102019 2391323601003693021155002020 2401203603003797091157002018 241513601104833030150012020 2421313601104947330178002018 2431303601003402370136002017 2441813601004296210170002016 2451513601104658840177002021 2462321302003798060157112019 2471503601104244820144002018 2481423601004286920187002018 2491723601003973460159002017 2501411301104772480165102019 2511221301014095470154102017 2521203602014064661161002019 2532523603003707170147002017 2541401301003785370150102020 2551513601003761241162002020 2561503603003389430122002018 2571203602002744420107002019 2581513601105107920184002018 2591513601114427940155002018 260403601003745720156002020 2611411301003115620105112017 2621311301004235730147112017 2631411301004825831161102016 2641203601014471550175002018 265813601013010280126002020 2661733602003928261166002018 2671223601105343190193002018 268721301003736330152102019 2691713601004017571155002021 2701811301003746720146102019 2711613601003795321152002019 2721711301003611690136112019 2731403601104859681175002019 2741303601013947620150002017 2751423601003208210138002019 2761623601003270960131002017 2771401301003771360151102021 2781403601003594340148002019 2791313601004350610171012018 2802723601004429581165002020 281933601104492220140002018 2821723603003943270170002020 2831423601003840000160002016 2841413601105815860200002021 2851413601003821280154012021 286821301003601290131102016 2871301301013784190127102021 2881321302003814390146102018 2891603601003864930130002017 2901421301003884670151102017 2911323601114863430177002020 2921713601104035340130002017 2931513601115993410222002018 2941613601003928681161002020 2951321301003085890125102018 2961713601103914060132002018 2971421301004195690172112021 2981203601106555820268002019 2992213602105279830185002018 3001811301003803890146102016 3011513601013930950166002020 3022013602013776010161002019 3031513601004295530198002018 3041413601003278891141002019 3051823601003974280160002018 3061503601004725121214002019 3072303601104550280164002019 3081311301004891750188102017 3091603601014141291166002021 3101801301004075150154102019 3111203601002809931116002017 3121423601003802220148002019 313523601004520831177012018 3141521301004356480167102018 3151713601003651221141002017 3161813601003795300147002020 3171321301004367030176102021 3181621301004017610148102018 3191521302105918460171112017 3201613601004111500173002016 3211203601003690190157002019 3221513601003558631143002020 3231513601005018840213002016 3241601303004269540165102018 3251203601003506050147002018 3261623601003655610153002016 3271521301005149281180102020 3281311301004501791144102018 3291723601114551700159002017 3301603601004378950175012017 3311733602004298720176002020 3321213601002859041113002021 3331613601004385801190002017 3341633602105029450181002017 3351703602004085930168002020 3361603601004768790197002020 3371703601004042811156002018 3381613601003720970146002020 3391713601104362130120012019 3401611301004021350164102019 3412013601003940160125012018 3421511301105983210219102018 3431511301004582010176102019 3441411301004760780197102019 3451533601003469440131002021 3461403601003902820144012020 3471303601004245480171002020 3481321301104846360157102017 3491413601013016030116002020 3501513601104075000154002017 3511423601004399881161002021 3521831301004828871182102020 3531511301004065090164102021 3541603601002925150115012017 355803601004131730169002018 3561613602004278130167002018 3571923601004251171158002020 3581313601003502750143002017 3591311301004476390166102016 3601613601004919720199002018 3611813603003560150136012017 3621323601003486080117002017 3631413602003916000157002019 3641611301004795481145112017 3651603601014126090156002019 3661713601003726400152002021 3671411301003837900134102019 3681803602003444560158002021 369713601103798740126002017 370703602013734191153002019 371142360100200000157002017 3721603601004427320172002020 3731423601004199150169002020 3741511301003806130152102018 3751611301014346140166102018 3761533601004730920201002017 3771523601104377930143002017 3781501301014375090170102017 3791801301004441190187102017 3801131301004754381192102021 3811133601005496910249002019 382613601003287441145002017 3831713601004430631177002019 3841413601013934680157002020 3851823602003796171167002019 3861803601104720840178002018 3871513601003590190132012016 3881323601003521781138002018 3891823601105008510175002018 390603601003457120141002017 3911423601003798450159002018 3921321301004199350156112019 3931401301105759711184102018 3941511301003902890148102018 3951503601003181180125002019 3961713601003878841166002016 3971413601004252471169002016 3981413601003226280124002019 399801301004071880156112021 4001531302105566661160102017 4011103602004089730162002019 4021703601004254780182002020 4031303601014192510179002019 4041503601003578980138002021 4051421301105153430177102019 4062703601003395270136002018 4071533601114174411144002018 4081713601003078390124002018 4091603601003738840161002017 4101613601114981550194002017 4113036041134000001356002020 4121801302003853310150102018 4131723601013983890171002020 4141713601004152270164002021 4151003601004408070166002020 4161703601103843360150002017 4171411301004230381135112016 4181513601014198320162002016 4191913601104043890127002021 420521301004623351161102017 421313601005177330208002019 4221803601003633700156002019 4231413601004018901176002016 4241611301004298300167112018 4251413601114037520114002021 4261413601013104000125002019 4271703601003644040154002017 4281503601003431310142002020 429813601003826440144012017 4301703602003500011136012019 4311523601003789091167012020 4321413601005008320208002019 4331703601003571600144002016 4341603601104871460141012016 4352511303013895770149102021 4361101301005222100208102018 4371313601003816460164002020 4381501301105412070171102019 4392501301004803230181102019 4401423602004374811170002018 4411703601004091410154002017 4421113601003769571142002019