Consider the data provided in the table below, which shows years of education and income for...

Consider the data provided in the table below, which shows years of education and income for ten individuals.

Education	Income(1)	Income(2)
10	15,000	15
12	20,000	20
12	35,000	35
12	40,000	40
12	60,000	60
16	50,000	50
16	60,000	60
16	70,000	70
18	60,000	60
21	80,000	80

A) Calculate the covariance and correlation of education and income, using the “Income1” column for income, which is measured in dollars.

B) Calculate the covariance and correlation of education and income, this time using the “Income2” column for income, which is measured in thousands of dollars.

C) Based on what you have done, discuss the merits of using covariance and correlation to measure the relationship between two variables.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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