Question

Your mayor just announced that the local unemployment rate dropped last month from the prior month. It went from 10.5% to 10.4%. Evaluate the scenario. Is there sufficient information to determine significance? Support your response with specific examples.

Answer 1

There is a sufficient information to determine significance but it is subjective because some may want information of the size of the population. Here, a drop of 0.1%, i.e., one in thousand is not significant.

Usually, we require the population size to determine the significance, but in this context, it is not necessary.

A mayor is an elected member of a city or a town called as municipal corporation.

So, if we take the average population of a city to be 25,000, then 10.5% of 25,000 =2,625 and 10.4% of 25,000 =2,600. So, there is a drop of 25 people which is not significant. Now, we take a large population size of 2 million. 10.5% of 2 million =210,000 and 10.4% of 2 million =208,000. The drop of 2000 compared to 2 million is too small and thus, not significant.

However, if we consider a drop of 5,000 or more to be significant irrespective of the population size, then we need the size of the population to see if the difference exceeds 5000 or more in order to determine significance.