How Form 8865 Functional 2023-2024

Hello and welcome to this video. We're going to interpret the regression coefficient results of a log level regression. Suppose we have the following model that we want to interpret the results of. The dependent variable is log wage, which is a function of an intercept, education, experience, and age. Let's say we gathered a fair amount of data and ran the regression, and we obtained the following results. First, it's important to note that these results are fictional and should not be taken at face value. However, we can still focus on how to interpret them. The results are in a typical regression output format. The intercept stands for beta 1, represented by the value given here. The term "education" in the regression results represents beta 2, with a value of 0.33. The term "experience" stands for beta 3, with a value of 0.12. Finally, the term "age" represents beta 4, with a value of 0.04. Now, let's discuss how to interpret the value for beta 1 (0.33). Before we do that, we need to understand a few assumptions that are necessary in order to interpret our regression coefficient estimates. The first assumption is that the Gauss-Markov assumptions hold. Additionally, we need to assume that the coefficients are both statistically and practically significant. To determine statistical significance, we look at the T and P values, which are very low in this case. For practical significance, we need to assess whether the effect size of the coefficient is noticeable and has a meaningful impact in the real world. Assuming these assumptions hold, we can interpret beta 1. Beta 1 tells us something about the effect of education on wages. To correctly interpret it, we will take the differential of our model with respect to education. The differential will give us the...