Eco 320, Fall 2002 Prof. Lahiri Homework #4: Project on Regression Analysis Posted on the web on 10/30/2002 (Wednesday). Homework #3 is due on 11/08/2002 (Friday). Use Microsoft Excel to do the calculations. All the results should be presented, interpreted and printed out in Microsoft Word format. Excel output can be easily copied and pasted on the Word file. Nothing should be submitted handwritten. Presentation should be as tidy as possible. The data is downloadable on the web (Click here to download). It contains information on 30 baseball teams in year 2000 on number of Wins (Y), and Total Payroll (X). You are supposed to perform a simple regression analysis of the performance (number of Wins) of the major baseball teams on the size of their team Payrolls during the 2000 season. Based on the data, conduct at least the following analysis: 1. Draw the scatter diagram of Y against X; 2. Obtain descriptive statistics (Mean, Median and Mode, Variance, Std Dev., etc.); 3. Obtain a and b of the regression equation, Se, Sb, and the Coefficient of Determination from the Excel regression output; 4. Compute the above statistics in 3 step by step using XiYi, Xi, Yi, Xi2, Yi2 from Excel, and compare them with the results in 3. 5. Draw the fitted regression line on the scatter diagram, obtain the residuals and plot them on the scatter diagram too; 6. Statistically test the null hypothesis that Payroll does not affect Wins at 1% level of significance against the alternative that Payroll does matter positively (one sided alternative); 7. Calculate the square of correlation coefficient, and check if it is the same as the coefficient of determination; 8. Test if the correlation coefficient is 0 against the alternative that it is not at the 10% level of significance; 9. Write a paragraph or so on any observations you may have on the data, regression estimates or the regression residuals; 10. Calculate the additional number of games New York Mets would have won if it had spent additional 20 million dollars on Payroll in 2000.
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