Question 5

You are asked to investigate the effect of a new garbage incinerator on housing values in a small town. To investigate this question you are provided with data on houses that sold in the period before construction of the incinerator and houses that sold after construction in the small town. The file containing the data is named PUAD661_PS5_Q5.sav. Definitions for the variables are provided on the next page.

1. Estimate a bivariate regression to determine if housing prices fell after the construction of the garbage incinerator. Describe the findings including statistical significance. (1 point)
2. What quasi-experimental design did you estimate in Part A? Do you believe the results? Explain your answer. Include a discussion of the threats to internal validity in your response. (1 point)
3. As control variables are important to include in quasi-experiments, add some relevant ones to the model you used in Part A. Which ones do you select and why? How do your results change? For now, exclude the nearinc variable. (1 point)
4. The data set includes a variable for distance to the incinerator, nearinc, which is coded as 1 if the house is less than 3 miles from the incinerator and 0 if the house is greater than or equal to 3 miles. The group of houses further away from the incinerator can serve as a comparison group for the closer houses. Add nearinc to your model in Part C and complete the following box of means. How do these results differ from those in Part C? (1 point)

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