Scenario 5-Dummy Variable
It seems that I am understanding the dummy variable section's various tricks and traps (using not just D but D* (x-9) etc). However, while my other numbers seem on par, I actually have something like a ESS=32 for scenario 1 and 27 for scenario 5 with the dummy variable (flipped from the sample illustrative sheet), therefore, while my TSS has increased, my ESS has decreased (NOT moving in tandem with TSS)!!!
Can someone please help me? I've checked and rechecked and everything seems good except this. I think I'm all done with this project except for this project, and so far I've thought I understood it clearly!
Many thanks in advance NEAS for an expedient answer.
| Part 5 (Dummy Variable) | Part 4 (No Dummy Variable) | Part 1 (Stable Rates) |
Estimate of sigma | 0. 484399 | 0.820495 | 0.522311 |
Estimate of beta2 | ----------- | 0.160615 | 0.13747 |
Standard error of beta2 | ----------- | 0.023795 | 0.015141 |
adjusted R2 | 0.828522 | 0.49529 | 0.69494 |
TSS | 158.7295 | 158.7295 | 106.4193 |
ESS | 27.21854 | 78.76587 | 31.91866 |
[NEAS: Your results are expected. The sigma is greater (by random fluctuation) in the stable rates simulation (52.2% vs 48.4%), so the ESS is also higher (31.9 vs 27.2). If you run a second simulation, you might get the opposite results.]