What are other factors that can affect the price of a house

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Regression with Logs. Using data from 1981 for houses sold in North Andover, Massachusetts, the model that relates housing price (measured in thousands of dollars) to the distance from a recently built garbage incinerator (measured in miles) was estimated: n=135,R2 =0.162 (a) Interpret the estimated coefficient on log(dist). That is, you need to explain what the number 0.312 means. Is the sign estimate what you expect it to be? Explain. (b) What are other factors that can affect the price of a house? (c) Do you think that those other factors in (b) can be correlated with the distance from a garbage incinerator? (Hint: think about the city’s decision on where to build the incinerator.) (d) Based on your answer to (c), do you think that this simple regression provides an unbiased and consistent estimator of the causal (ceteris paribus) effect of the distance to the garbage incinerator? Explain. (Hint: are any of the assumptions we require for consistency and unbiasedness violated here?) (e) Interpret the R-squared of this regression. That is, explain what R2 = 0.162 means here.

Reference no: EM131002988

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