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Econometrics Problem Set 5

Tarun Singh analyzed regression data on the effects of shall-carry concealed weapons laws on violent crime, robbery, and murder rates. Adding fixed state and time effects decreased the coefficient on shall-carry laws, showing these laws have less effect after accounting for other factors. The regressions also showed shall-carry laws slightly reduce violent crimes and murders but slightly increase robberies, though these effects were not statistically significant. Additional variables like income inequality could still impact the results.

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Econometrics Problem Set 5

Tarun Singh analyzed regression data on the effects of shall-carry concealed weapons laws on violent crime, robbery, and murder rates. Adding fixed state and time effects decreased the coefficient on shall-carry laws, showing these laws have less effect after accounting for other factors. The regressions also showed shall-carry laws slightly reduce violent crimes and murders but slightly increase robberies, though these effects were not statistically significant. Additional variables like income inequality could still impact the results.

Uploaded by

tarun singh
Copyright
© Attribution Non-Commercial (BY-NC)
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Download as DOC, PDF, TXT or read online on Scribd
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Tarun Singh

Worked With:
Alexander Marcus and Alex Sloan
Economics 1123, Problem Set 5

1) a) The coefficient on shall in regression (ii) seems to show that the


presence of a shall-carry law decreases the amount of violent crime by
36.83%. This number is large in the “real world” sense because it seems
to suggest that 36.83% of violent crime can be prevented by allowing
people to carry concealed weapons.

b) Adding the control variables in regression (ii) does not change our
conclusion about the effect of shall-carry laws. Although adding the
control variables did reduce the coefficient on shall by .0746, the
coefficient was still very large and still statistically significant, so it does
not change our conclusion.

c) A variable which may vary from state to state but varies little over time
could be the marriage rate. The marriage rate may lead to OVB as there
may be a correlation between gun ownership and marriage rate that may
be left out. Another variable that may lead to OVB could be income
inequality in a state. This income inequality would differ from state to
state but most likely differ little over time, and if there is a correlation
between income inequality and certain types of crime this could also lead
to OVB.

2) Table 1
The Effect of Concealed Handgun Laws on Violent Crime: Regression
Results
Dependent variable: ln(vio)

(1) (2) (3) (4) (5)


Coefficient on shall -.4429646 -.368386 -.046141 -.027993 -.02799
(.0475283 9 5 5 (.04163
) (.034787 (.019943 (.019373 86)
9) 3) 3)
State characteristic No Yes Yes Yes Yes
control variablesa?
State fixed effects? No No Yes Yes Yes
Year fixed effects? No No No Yes Yes
F-statistic testing – – 210.38 291.42 –
the hypothesis that (0.000) (0.000)
the state fixed
effects are zero
F-statistic testing – – – 14.63 20.67
the hypothesis that (0.000) (0.000)
the year fixed
effects are zero
HAC (clustered) SEs? No No No No Yes
N 1173 1173 1173 1173 1173
Notes: All regressions include an intercept. For regressions (1) – (4),
heteroskedasticity-robust standard errors appear in parentheses below
estimated coefficients; for regression (5), the standard errors are
heteroskedasticity-robust and clustered at the state level, so as to allow for
serial correlation in the error within a state. p-values appear in parentheses
beneath heteroskedasticity-robust F-statistics (or, for regression (5),
heteroskedasticity-robust-clustered F-statistic).
a
Regressions with “state characteristic control variables” include the following
regressors: incarc_rate, density, avginc, pop, pb1064, pw1064, pm1029.

Table 2
The Effect of Concealed Handgun Laws on Robberies: Regression
results
Dependent variable: ln(rob)

(1) (2) (3) (4) (5)


Coefficient on shall -.773320 -.528820 -.007818 .0268298 .026829
7 2 9 (.025240 8
(.069262 (.051002 (.026442 6) (.05335
3) 1) 8) 64)
State characteristic No Yes Yes Yes Yes
control variablesa?
State fixed effects? No No Yes Yes Yes
Year fixed effects? No No No Yes Yes
F-statistic testing the – – 190.47 247.55 –
hypothesis that the (0.000) (0.000)
state fixed effects are
zero
F-statistic testing the – – – 12.32 24.73
hypothesis that the (0.000) ( 0.000)
year fixed effects are
zero
HAC (clustered) SEs? No No No No Yes
N 1173 1173 1173 1173 1173
Notes: See the notes to Table 1.

Table 3
The Effect of Concealed Handgun Laws on Murders: Regression
results
Dependent variable: ln(mur)

(1) (2) (3) (4) (5)


Coefficient on shall -.47337 -.313173 -.06081 -.014952 -.01495
25 5 (.027213 4 (.03910
(.04853 (.035701 8) (.027224 6)
6) 9) 7)
State characteristic No yes yes Yes Yes
control variablesa?
State fixed effects? No No Yes Yes Yes
Year fixed effects? No No No Yes Yes
F-statistic testing the – – 88.22 106.12 –
hypothesis that the (0.0000) ( 0.000 )
state fixed effects are
zero
F-statistic testing the – – – 12.62 18.75
hypothesis that the ( (0.000)
year fixed effects are 0.0000 )
zero
HAC (clustered) SEs? No No No No Yes
N 1173 1173 1173 1173 1173
Notes: See the notes to Table 1.
3) As seen in the tables above, adding fixed state effects changes the
conclusions we had reached. In all three tables adding fixed state effects
decreased the coefficient on shall, meaning when we account for fixed state
effects, shall carry laws have less of an effect reducing violent crime rates.
Similarly, when adding fixed time effects the coefficient on shall changes in
all three tables, however, this change is much smaller than the change seen
by adding fixed state effects and the change caused by fixed time effects
causes the coefficient to either increase or decrease depending on which
table we are looking at. Looking at the F-statistic testing the null hypothesis
that the fixed year effects are zero, we see that we reject the null hypothesis
in all three tables. This leads me to believe that the best regression is either
regression 4 or regression 5 as both would capture the OVB that would be
present if we omitted fixed state effects and fixed time effects.

The clustered standard errors are larger than the conventional


heteroskedasticity-robust errors, however our conclusions are not sensitive to
the use of clustered standard errors since the coefficient on shall was not
significant in any of the regressions when adding fixed state effects and fixed
time effects.

The regression data shows us that allowing for shall carry laws slightly
reduces violent crime and murder rates but also slightly increases robberies.
However, the data also shows that allowing for shall carry laws has no
statistically significant effect on violent crimes, robberies or murders.

The differences in these estimates across crime rates are consistent with the
differences in the natures of these crimes. For example, violent crimes and
murders tend to be crimes of passion so if there are more relaxed gun
carrying laws victims will be better able to defend themselves, and this may
dissuade their assailants, thus the slight negative coefficients for shall when
looking at violent crimes and murder make sense. Robberies on the other
hand are often pre-meditated, and if people can carry guns easier they have
a greater ability to use the guns to rob a store which may be what is leading
to the slight positive coefficient for shall when looking at robberies.

The possibility of OVB due to a correlation between income inequality and


certain violent acts still remains. It would be interesting to look at data that
accounts for income inequality. I would also like to look at data in a quadratic
form or to include interaction terms between population density and income
inequality to see if there is any functional form misspecification. The
conclusions, furthermore, may be affected by functional form
misspecification.

Using the data from regressions 4 and 5 we observe that there is no


significant relationship between concealed weapons laws and the crime rates
we studied.

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