1. 1 Interactions Between Independent Variables (SW Section 8.3)

2. 2 (a) Interactions of two binary vars

3. 3 Interpreting the coefficients

4. 4 Example

5. 5 (b) Interactions of continuous and binary variables

6. 6 Binary-continuous interactions: the two regression lines

7. 7 Example: TestScore, STR, and HiEL (=1 if PctEL > 10)

8. 8 Testing Hypotheses about Interaction Effects

9. 9 (c) Interactions of continuous vars

10. 10 Example: TestScore, STR, PctEL

11. 11 Testing Hypotheses about Interaction Effects

12. 12 Application: Nonlinear Effects on Test Scores of the Student-Teacher Ratio (SW Section 8.4)

13. 13 1. Are there different effects for different STR levels?

14. 14 2. Are there interactions between PctEL and STR?

15. 15 What is a good “base” specification?

16. 16

17. 17 Tests of joint hypotheses:

18. 18 Interpreting the regression functions via plots:

19. 19 Comparing the regressions with interactions:

20. 20 Application: Berg Dale & Krueger (QJE, 2002)

21. 21 Application: Berg Dale & Krueger (QJE, 2002)

22. 22 Application: Berg Dale & Krueger (QJE, 2002)

23. 23 Application: Berg Dale & Krueger (QJE, 2002)