Question

You want to investigate the relationship between cumulative GPA scores at graduation and incoming SAT scores of students. For this purpose, you have collected data from a balanced panel of 120 undergraduate colleges and universities in the United States over a ten year period. Discuss some of the differences across entities which you potentially capture by adding binary variables for each of the colleges as controls.

Answer 1

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Answer:

Various possible entity fixed effects. These should include differences between educational institutions that have

• made it a policy not to fight grade inflation
• a different degree of selectivity (if you admit only students with an SAT score of 2400, then there will be no relationship)
• gender or religion specific requirements
• an admission process that is need-blind
• large varsity sports programs
and so forth.