# quant question

in part two of the question below, why is the critical value 1.65 and not 1.96? i thought you always use the two tailed t test for determining the statistical significance of coefficients. the answer looks like it used the critical value for the one-tailed test at a 5% significant level… In a recent analysis of salaries (in \$1,000) of financial analysts, a regression of salaries on education, experience, and gender is run. Gender equals one for men and zero for women. The regression results from a sample of 230 financial analysts are presented below, with t-statistics in parenthesis. Salaries = 34.98 + 1.2 Education + 0.5 Experience + 6.3 Gender (29.11) (8.93) (2.98) (1.58) Part 1) What is the expected salary (in \$1,000) of a woman with 16 years of education and 10 years of experience? A) 54.98. B) 65.48. C) 59.18. Your answer: C was correct! 34.98 + 1.2(16) + 0.5(10) = 59.18 This question tested from Session 3, Reading 12, LOS a, (Part 1). In a recent analysis of salaries (in \$1,000) of financial analysts, a regression of salaries on education, experience, and gender is run. Gender equals one for men and zero for women. The regression results from a sample of 230 financial analysts are presented below, with t-statistics in parenthesis. Salaries = 34.98 + 1.2 Education + 0.5 Experience + 6.3 Gender (29.11) (8.93) (2.98) (1.58) Part 2) Holding everything else constant, do men get paid more than women? Use a 5% level of significance. No, since the t-value: A) does not exceed the critical value of 1.65. B) does not exceed the critical value of 1.96. C) exceeds the critical value of 1.96. Your answer: B was incorrect. The correct answer was A) does not exceed the critical value of 1.65. H0: bgender ≤ 0 Ha: bgender > 0 t-value of 1.58 < 1.65 (critical value) This question tested from Session 3, Reading 12, LOS

do men get paid MORE than women had it said do men and women get paid the same, 2 tailed. but here you want just the greater than… so 1 tailed.

H0 would be less than or equal to, Ha would be greater than, which is a one tailed test