Question: Your friend visited to Union Square a couple of days before the elections this November, and noticed that many New Yorkers wear Obama’s campaign button. She was wondering who are the type of people who wear these buttons, so she stopped people on the street, some of them wearing and some not wearing buttons, asked them a couple of questions about themselves, and wrote down the answers. After interviewing 128 people she went back hoMeand run the following OLS regression, with 3 IDV’s:

DV: Wearing Obama’s campaign button: 1=wearing it, 0=not

IDV1: Ideology: extreme liberal=7, extreme conservative=1

IDV2: Ethnicity: 1=White, 2=Hispanic 3=African American, 4=other

IDV3: Interaction between religiosity and ethnicity: a multiplication between a 4 point scale of religiosity (1=secular, 4=orthodox) and a dummy of Gender (1=female, 2=male ethnicity)

However, there are several problems with this model specification.

Describe three problems in this model, and explain what would be the proper specification in each case.