Which parameter measures the effect of coaching

Reference no: EM131029702

Powers and Rock (1999) consider a two-equation model for the effect of coaching on SAT scores:

Xi = 1 if Uiα + δi>0, else Xi = 0;

Yi = cXi + Viβ +σεi.

Here, Xi = 1 if subject i is coached, else Xi = 0. The response variable Yi is subject i's SAT score; Ui and Vi are vectors of personal characteristics for subject i, treated as data. The latent variables (δi, εi ) are IID bivariate normal with mean 0, variance 1, and correlation ρ; they are independent of the U's and V 's. (In this problem, U and V are observable, δ and β are latent.)

(a) Which parameter measures the effect of coaching? Howwould you estimate it?

(b) State the assumptions carefully (including a response schedule, if one is needed). Do you find the assumptions plausible?

(d) Why can they assume that the disturbance terms have variance 1?

Reference no: EM131029702

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