Help! Let us suppose that besed on the data from 50 major cities and environmental economist estimated a wage regression as follows: WAGE = 103.7 - 1.2X1 - 2.1X2 + 3.6X3 + 2.3X3 R2 = 0.55 Where: WAGE is the annual wage measured in $1000. X1 is an index of recreational oppurtutnities. X2 is an index of educational oppurtunities. X3 is an index of crime (crime rate). X4 is an index of air pollution. The above regression (especially R2) tells us that 55 percent of the variability in WAGE is explained by the regresion of WAGE on the explanatory variables X1, X2, X3, X4. The regression coefficient (-2.1) associated with the explanatory variable X2 can be interpreted as follows: All else equal, if educational oppurtunity index of a city A is 1 unit more than the same index of city B, then the annual wage rate of city A is $2100 less than in city B. That is a person ho has to work in city B with less educational oppurtunity compared to city A must be compensated trough his/her wage by an additional amount of $2100. Your task in this problem is to interpret in the same manner the coeeficent associated with the variable X4, the air pollution variable. Thanks!
