Suppose that you were examining how state marijuana legalization has affected the number of car accidents in a state. Suppose that you had data over a 20-year period, during which 23 states had...

Suppose that you were examining how state marijuana legalization has affected the number of car accidents in a state. Suppose that you had data over a 20-year period, during which 23 states had decriminalized marijuana. And, suppose that you have the following data (and variable names):

• Year (Y); • State (S); • Subscripts s and y refer to the state and year • # accidents per capita in the state and year (A); • A dummy variable for whether marijuana is decriminalized in a state in a given year (MJD); • Population of state in the year (P) for weighting the observations. a. With a Simple Regression of A M i JD i = + × + i b b ( ) e 0 1 why might there be omittedvariables bias? b. Write an equation for a regression model with fixed effects that addresses potential omittedvariables bias. c. Which states would be contributing to the estimated effect of decriminalization? d. How would you interpret the coefficient estimate on MJD, in light of the interpretations in Section 8.1?