Problem 1:

Public outrage about CEO pay, witnessed in the past few years, finds its roots during the onset of the "Great Recession." In this problem, we examine beliefs about CEO compensation. To begin, load CEO.csv from the course website. The data are a survey of 632 Americans. They were asked questions on how much they thought CEOs do and should earn. (The variables are called perceived and ideal, respectively). Note that the data are unfortunately "top-coded" in that people who said that CEOs do or should earn over $\$ 1$ million annually were discarded from the dataset. People who refused to respond to certain questions were also discarded.

1. Estimate a linear model predicting ideal CEO salary using both perceived CEO salary and age. Report the coefficients and standard errors in a neatly formatted table, and interpret their values in words.
2. Using the data and the estimated regression, evaluate the plausibility of the normality assumption. Provide some intuition for your finding.

Problem 2:

In this problem we will replicate and reexamine the results from Table 3 of "Electoral Institutions, Cleavage Structures, and the Number of Parties", O. Neto and G. Cox, American Journal of Political Science, Vol. 41, No. 1 (1997). Refer to this paper for all variable definitions and for an explanation of the substantive question addressed by Table 3 (The paper is available under the "Causal Inference" folder on the course website at iSites).

1. Load the data file netocox.csv into Stata or R. You should find the variables ENPRES, ENETH, and RUNOFF. Use this data to replicate all results from Table 3 of the aforementioned paper.
2. Produce a scatterplot with the ENPRES variable on the \(y\) -axis and the ENETH variable on the \(x\) -axis. Add regression lines according to Model 1 in Table 3 , but use some method (e.g. different colors or line types) to differentiate between the regression lines for the countries with RUNOFF \(=0\) and countries with RUNOFF \(=1\). Include a caption or legend so that we can distinguish between the lines.
   Provide non-causal interpretations for the ENETH and RUNOFF coefficients from Model 1. Does this model make sense in terms of the theoretical discussion of the paper? Explain why or why not.
3. Produce a scatterplot with the ENPRES variable on the \(y\) -axis and the ENETH variable on the \(x\) -axis, but use different colors or symbols to indicate the runoff and the non-runoff countries. Add regression lines according to Model 3 in Table 3 and use some method (e.g. different colors or line types) to differentiate between the regression lines for the countries. Include a caption or legend so that we can distinguish between the lines.

Price: $25.78

Solution: The downloadable solution consists of 15 pages, 1078 words and 14 charts.
Deliverable: Word Document