unzipfile "output7717034280080927434.zip", replace
use cntry essround happy using ESS1-6e01_0_F1, clear
// Drastically reduce sample size
bysort cntry essround: keep if _n < 5
// Encode country variable
encode cntry, gen(country)
// Fit random intercept model
mixed happy || country:
predict u0, reffects
predict u0se, reses
// Calculate posterior intercept
generate eb_happy = u0 + _b[_cons]
// Plot posterior intercept
preserve
egen pickone = tag(country)
keep if pickone
egen order_ = rank(-u0), unique
labmask order_, value(country) decode
gen high = u0 + _b[_cons] + (1.96 * u0se)
gen low = u0 + _b[_cons] - (1.96 * u0se)
local avg = _b[_cons]
twoway (rcap eb_happy eb_happy order_, dsymbol(x)) ///
(rspike high low order_) , ///
yline(`avg') xlabel(1/32, val ang(v)) ///
xtitle("") ///
ylabel(4/10) ///
ytitle("Country-level residuals + intercept") ///
legend(off) ///
title("Random intercept model") ///
name(emp_bayes, replace) nodraw
restore
// Fit OLS models
regress happy
local avg = _b[_cons]
regress happy i.country
predict avg_happy
predict se_happy, stdp
// Plot OLS estimates
preserve
egen pickone = tag(country)
keep if pickone
egen order_ = rank(-avg_happy), unique
labmask order_, value(country) decode
gen high = avg_happy + (1.96 * se_happy)
gen low = avg_happy - (1.96 * se_happy)
twoway (rcap avg_happy avg_happy order_, dsymbol(x)) ///
(rspike high low order_) , ///
yline(`avg') xlabel(1/32, val ang(v)) ///
xtitle("") ///
ylabel(4/10) ///
ytitle("Country-level means") ///
legend(off) ///
title("OLS regression model") ///
name(plain, replace) nodraw
restore
graph combine emp_bayes plain, col(1) ysize(8) name(combo, replace)
// Plot EB and OLS means against one another to illustrate
// shrinkage in multilevel modeling
preserve
egen pickone = tag(country)
keep if pickone
twoway (scatter eb_happy avg_happy) ///
(function y = x, range(0 10)), ///
legend(off) xtitle("OLS estimates") ytitle("Posterior intercept") ///
title("Shrinkage")
restore
