# 2 Let us modify Computer Exercise C4 in Chapter 8 by using voting outcomes in 1990 for incumbents… 1 answer below »

2    Let us modify Computer Exercise C4 in Chapter 8 by using voting outcomes in 1990 for incumbents who were elected in 1988. Candidate A was elected in 1988 and was seeking reelection in 1990; voteA90 is Candidate A’s share of the two-party vote in 1990. The 1988 voting share of Candidate A is used as a proxy variable for quality of the candidate. All other variables are for the 1990 election. The following equations were estimated, using the data in VOTE2.RAW:

and

voteA90 5 75.71 1 .312 prtystrA 1 4.93 democA

(9.25)  (.046)                 (1.01)

2.929 log(expendA) 2 1.950 log(expendB)

(.684)                             (.281)

 R2

n 5 186,
R2 5 .495, – 5 .483,

voteA90 5 70.81 1 .282 prtystrA 1 4.52 democA

(10.01)  (.052)                (1.06)

2.839 log(expendA) 2 1.846 log(expendB) 1 .067 voteA88

(.687)                            (.292)                         (.053)

 R2

n 5 186,
R2 5 .499, – 5 .485.

(i)       Interpret the coefficient on voteA88 and discuss its statistical significance.

(ii)     Does adding voteA88 have much effect on the other coefficients?