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# The purpose of this question is to investigate the influence of various factors on the probability of an individual having private health insurance.

INSTRUCTIONS TO CANDIDATES

Peer Evaluation Survey

Each group member will be required to complete an anonymous peer evaluation survey. The survey will be conducted via the TeamMates app which will email you a unique link to the survey (delivered to your Monash student email address).You will be asked to evaluate your group members’ participation and effort. The aim of the survey is to identify and address any dysfunctional groups as early as possible.

The survey may also be used to adjust your assignment marks in the following manner:

1. Consider hypothetical student called Arsene:

- Let n0 equal the number of (D) votes that Arsene receives from his teammates. A (D) indicates that in the opinion of his teammates Arsene has contributed nothing to the completion of the assignment.

- Let n1 equal the number of (C) votes that Arsene receives from his teammates. A (C) vote means that in the opinion of his teammates Arsene has contributed less than it was agreed by the group that he would contribute.

- Let GM equal Arsene’s group submission mark. If

n0 + n1 ≥ 2, then Arsene’s mark for the assignment is

max{0, (1 – 0. 4(n0) – 0. 15(n1)}GM.

If

n0 + n1 < 2,

then Arsene’s mark for the assignment will be equal to the GM.

2. If you fail to complete the survey by the deadline, we will assume that you have given everyone else in your group a (B) and that you have given yourself a (D).

Failure to complete the survey by the deadline will result in a loss of marks, so please complete the survey on time. It is important to communicate clearly with your group members and make sure that everyone understands what is expected from them.

Data Description for Question 1

The purpose of this question is to investigate the influence of various factors on the probability of an individual having private health insurance. An Eviews workfile containing the data for the assignment has been placed in the file Assignment 1 Data.wf1 which has been uploaded to the Assignment folder on Moodle. The data set contains observations on the following variables for a randomly selected sample of 3206 individuals:

Variable Code   Description

private 1 for any individual who has private health insurance, 0 otherwise age age in years

age2 age2

chronic number of chronic diseases an individual has educ years of schooling

female 1 if individual is female, 0 otherwise hhincome a measure of household income

hstatusg 1 if health status self-assessed as good, 0 otherwise white 1 if individual is white, 0 otherwise

hisp 1 if individual is Hispanic, 0 otherwise

Question 1 (85 marks)

(a) (20 marks)

i) Assume that

E(private|female) = β0 + β1female.

The associated linear regression equation is given by

private = β0 + β1female + u. (1)

Estimate (1) by OLS. Report the estimated equation in equation form in the main body of your assignment. Report the estimated coefficients and standard errors to three decimal places. Place the Eviews output in Appendix (a).

ii) Test the individual significance of the regressor female. State the null and alternative hypotheses, the form and sampling distribution of your test statistic under the null, the sample and critical value of your test statistic, your decision rule and your conclusion.

(2 marks)

(6 marks)

iii) Interpret     .

iv) Interpret     .

(2 marks)

(2 marks)

v) Do your results provide conclusive evidence that females are more/less likely than males to have private health insurance? Briefly explain.

vi) Derive a 95% confidence interval for β0.

vii) Do you consider your point estimate of β0 to be precise? Briefly explain

(2 marks)

(2 marks)

(2 marks)

viii) Use the confidence interval derived in vi) to determine whether or not      is statistically

significant at the 5% significance level.

(2 marks)

(5/5)

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