The aim of this exercise is to estimate the factors that determine the total energy consumption of individual households, which is measured in British

May 5, 2024

The aim of this exercise is to estimate the factors that determine the total energy consumption of individual households, which is measured in British Thermal Units (BTU). Our cross-sectional sample for the year 2015 includes 5686 households, and for each household, we will consider the following variables:Endogenous variablelog(TBTU) The logarithm of total household energy consumption (in BTU) in 2015Explanatory variablesEASST Household participation in home energy assistance/subsidy program in 2015 (no = 0; yes = 1)HMEM Number of household memberslog(TSQFT) The logarithm of total square footage of the households’ home.(i). Provide the OLS regression equation corresponding to the above model.(ii). The OLS regression output of this model is provided below. Provide an explanation of the model, discussing the relationship between the households’ energy consumption and the households’ characteristics (i.e., explanatory variables). Comment on the significance of the parameters using a significance level of 5% and discuss the goodness of fit.Dependent variable: log(TBTU)Parameter Estimate Std. Error t value Pr(>|t|)Intercept 6.162 0.082 74.88 <2e-16EASST (yes) 0.016 0.028 0.58 0.563HMEM 0.075 0.004 15.73 <2e-16

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