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Empirical Exercises 463

of workplace smoking bans on smoking, using data on a sample of 10,000
U.S. indoor workers from 1991 to 1993, available on the textbook website,
www.pearsonglobaleditions.com/Stock_Watson, in the file Smoking. The
data set contains information on whether individuals were or were not
subject to a workplace smoking ban, whether the individuals smoked, and
other individual characteristics.7 A detailed description is given in Smoking_
Description, available on the website.

a. Estimate the probability of smoking for (i) all workers, (ii) workers
affected by workplace smoking bans, and (iii) workers not affected by
workplace smoking bans.

b. What is the difference in the probability of smoking between workers
affected by a workplace smoking ban and workers not affected by a
workplace smoking ban? Use a linear probability model to determine
whether this difference is statistically significant.

c. Estimate a linear probability model with smoker as the dependent
variable and the following regressors: smkban, female, age, age2,
hsdrop, hsgrad, colsome, colgrad, black, and hispanic. Compare the
estimated effect of a smoking ban from this regression with your
answer from (b). Suggest a reason, based on the substance of this
regression, explaining the change in the estimated effect of a smoking
ban between (b) and (c).

d. Test the hypothesis that the coefficient on smkban is zero in the pop-
ulation version of the regression in (c) against the alternative that it is
nonzero, at the 5% significance level.

e. Test the hypothesis that the probability of smoking does not depend
on the level of education in the regression in (c). Does the probability
of smoking increase or decrease with the level of education?

f. Repeat (c)–(e) using a probit model.

g. Repeat (c)–(e) using a logit model.

h. i. Mr. A is white, non-Hispanic, 20 years old, and a high school
dropout. Using the probit regression and assuming that Mr. A is
not subject to a workplace smoking ban, calculate the probability
that Mr. A smokes. Carry out the calculation again, assuming that

7These data were provided by Professor William Evans of the University of Maryland and were used
in his paper with Matthew Farrelly and Edward Montgomery, “Do Workplace Smoking Bans Reduce
Smoking?” American Economic Review, 1999, 89(4): 728–747.