1. Many cities in California have passed Inclusionary Zoning (IZ) policies (also known
as below-market housing mandates) as an attempt to make housing more a§ordable.
These policies require developers to sell a proportion of their houses to low-income
people at prices that are below the market price. The data set means.csv contains (the
natural logarithm of) housing prices (lnprice) in 311 cities in 1990 and in 2000 (these
are identiÖed using the indicator d01 = 0 for 1990 and d01 = 1 for 2000), as well as
another indicator called izlaw, where izlaw = 0 for those cities which donít have the
policy and izlaw = 1 for cities that have the policy.
(a) (4 marks) Use data for 1990 and regression to estimate and compare the mean
lnprice for those cities that had IZ laws and those cities that did not. Test the null
hypothesis (at the 5% level of signiÖcance) that IZ had no e§ect vs the alternative
that IZ achieved its desired intention.