Harrison and Rubinfield (1978) collected data on 506 census tracts in the Boston area in 1970 to study hedonic housing prices and the willingness to pay for clean air. This data is available on the Springer web site as HEDONIC.XLS. The dependent variable is the Median Value (MV) of owneroccupied homes. The regressors include two structural variables, RM the average number of rooms, and AGE representing the proportion of owner units built prior to 1940. In addition there are eight neighborhood variables: B, the proportion of blacks in the population; LSTAT, the proportion of population that is lower status; CRIM, the crime rate; ZN, the proportion of 25000 square feet residential lots; INDUS, the proportion of nonretail business acres; TAX, the full value property tax rate ($/$10000); PTRATIO, the pupil-teacher ratio; and CHAS represents the dummy variable for Charles River: = 1 if a tract bounds the Charles. There are also two accessibility variables, DIS the weighted distances to five employment centers in the Boston region, and RAD the index of accessibility to radial highways. One more regressor is an air pollution variable NOX, the annual average nitrogen oxide concentration in parts per hundred million.
(a) Run OLS of MV on the 13 independent variables and a constant. Plot the residuals.
(b) Apply White's tests for heteroskedasticity.
(c) Obtain the White heteroskedasticity-consistent standard errors.
(d) Test the least squares residuals for normality using the Jarque-Bera test.