The causal or ceteris paribus effect of dist on price means that all other relevant factors equal

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1. The causal or ceteris paribus effect of dist on price means that all other relevant factors equal, it ¡s better to have a home farther away from the incinerator. The estimated equation is Log(price)= 8.05 .365 Log(disl)+(0.65) (.066) which means a 1% increase in distance from the incinerator is associated with a predicted price that is about .37% higher.

When the variables log(inst, log(area), log(and), rooms, baths, and age are added to the regression, the coefficient on log(dist) becomes about .055 (se .058). The effect is much smaller now, and it comes out to be statistically insignificant. This is because we have explicitly controlled for several other factors that determine the quality of a home (such as its size and number of baths) and its location (distance to the interstate). This is consistent with the hypothesis that the incinerator was located near less desirable homes to begin with.

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