Leading Issues in Economic Development

By Gerald M. Meier; James E. Rauch | Go to book overview

APPENDIX: HOW TO READ A REGRESSION TABLE

National accounts, social indicators, and other data have been accumulating for most less developed countries for more than 40 years. Writers on development frequently apply the technique of multiple regression to these data to estimate what they believe are underlying behavioral relationships among various economic, political, and social variables. They report their results in regression tables.

A number of selections in this book contain regression tables. Fortunately, lack of training in econometrics or statistics need not prevent the reader from understanding the important economic (as opposed to statistical) information contained in a regression table. The purpose of this Appendix is to show the untrained reader how to extract this information, using as an illustration a table adapted from the widely cited paper by Robert J. Barro, “Economic Growth in a Cross Section of Countries,” Quarterly Journal of Economics 106 (May 1991): 407—43. The presentation applies to multiple regressions performed using a method called or- dinary least squares, but the most important aspects of the discussion carry through even if other methods were used.

A regression table is read one column at a time. Each column reports an estimated relationship between the values of a dependent variable, y I, and the values of a set of explanatory variables, x1i, x2i,,xKi, where i indexes observations and K is the number of explanatory variables. This estimated relationship takes the form

where the number b0 is the constant or intercept, the numbers b1, b2, …, bK are the estimat- ed coefficients, and ei is the residual. The quantity b0 + b1x1i + b2x2i + … +bKxKi is the pre- dicted value of the dependent variable for observation i, so called because it gives the value of the dependent variable we would predict for observation i given knowledge of the values of the explanatory variables for observation i. It follows that the residual is simply the difference between the actual value of the dependent variable and its predicted value for each observation. By construction, the average or mean of the predicted values taken over all observations equals the mean of the actual values; equivalently, the mean of the residual is zero. As a consequence, if we know the estimated coefficients and the means of the dependent variable and the explanatory variables, we can compute the constant:

where the bar over a variable denotes its mean.

The estimated coefficients are the same for all observations because they are supposed to be estimates of underlying behavioral relationships between the dependent variable and the explanatory variables. The estimated coefficient b1, for example, tells us that a one-unit increase in the value of the explanatory variable x1 should cause the value of the dependent variable to increase by b1 units, holding the values of all other explanatory variables constant. These estimated behavioral relationships are the most important economic information contained in a regression table.

With these preliminaries out of the way, we now turn to Table 1. In all regressions reported, an observation consists of the values of the dependent variable and the explanatory variables for one country for one time period. The number of observations used to estimate the coeffi

-633-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Leading Issues in Economic Development
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Exhibits xiii
  • Preface xv
  • Using This Book xvii
  • Chapter I - Introduction 1
  • Chapter II - Historical Perspective 81
  • Chapter III - International Trade and Technology Transfer 133
  • Chapter IV - Human Resources 183
  • Chapter V - Investment and Finance 293
  • Chapter VI - Urbanization and the Informal Sector 331
  • Chapter VII - Agriculture 381
  • Chapter VIII - Income Distribution 433
  • Chapter IX - Political Economy 489
  • Chapter X - Development and the Environment 581
  • Appendix - How to Read a Regression Table 633
  • Index of Selection Authors 639
  • Index 641
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen
/ 650

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.