A study investigated the impact of house price appreciation on household mobility. The underlying idea was that if a hou

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A Study Investigated The Impact Of House Price Appreciation On Household Mobility The Underlying Idea Was That If A Hou 1 (93.85 KiB) Viewed 14 times

A study investigated the impact of house price appreciation on household mobility. The underlying idea was that if a house were viewed as one part of the household's portfolio, then changes in the value of the house, relative to other portfolio items, should result in investment decisions altering the current portfolio. Using 5,162 observations, the logit equation was estimated as shown in the table, where the limited dependent variable is one if the household moved in 1978 and is zero if the household did not move: Regression model constant Male Mean 0.82 0.09 0.78 0.03 0.003 0.007 III. Black Married78 marriage change A7983 PURN Logit -3.323 (0.180) -0.567 (0.421) -0.954 (0.515) 0.054 (0.412) 0.764 (0.416) -0257 (0.921) -4.545 Pseudo-R2 where male, black, married78, and marriage change are binary variables. They indicate, respectively, if the entity was a male-headed household, a black household, was married, and whether a change in marital status occurred between 1977 and 1978. 47983 is the appreciation rate for each house from 1979 to 1983 minus the SMSA-wide rate of appreciation for the same time, and PNRN is a predicted appreciation rate for the unit minus the national average rate. The statistics reported within parenthesis are standard errors. I. Interpret the results. Comment on the statistical significance of the coefficients. (2 Marks) II. The mean values for the regressors are as shown in the accompanying table. Variable male black married78 marriage change A7983 PNRN (3.354) 0.016 Taking the coefficients at face value and using the sample means, calculate the probability of a household moving. What would be the effect of a decrease in the predicted appreciation rate of 20 percent?