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In: Statistics and Probability

Models with Categorical Variables A study was done to determine whether the gender of the credit...

Models with Categorical Variables

  1. A study was done to determine whether the gender of the credit card holder was an important factor in generating profit for a certain credit card company. The independent variables considered were income, the number of family members, and gender of the card holder. The data can be found in the Excel file “CreditCard.” Run a multiple regression in Minitab to answer the following questions.

The Gender dummy variable was created using Male as the base.

Profit Income Family Gender
157 45000 1 0
-181 55000 2 0
-253 45800 4 0
158 38000 3 0
75 75000 4 0
202 99750 4 0
-451 28000 1 0
146 39000 2 0
89 54350 1 0
-357 32500 1 0
522 36750 1 1
78 42500 3 1
5 34250 2 1
-177 36750 3 1
123 24500 2 1
251 27500 1 1
-56 18000 1 1
453 24500 1 1
288 88750 1 1
-104 19750 2 1
  1. What is the prediction equation?
  1. Predict profit for a female card holder with an income of 50,000 and 3 family members.
  1. Based on the results, would the company prefer a male or female customer? Explain.
  1. Would you say that income is an important factor in explaining the variability of profit? (Perform a hypothesis test with α = 0.05)
  1. Would you say that number of family members is an important factor in explaining the variability of profit? (Perform a hypothesis test with α = 0.05)
  1. What is the value of R2? What is the value of adj R2? What is the interpretation of R2?

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orchestra answered 2 years ago
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