In: Statistics and Probability
The following data give the annual incomes (in thousands of dollars) and amounts (in thousands of dollars) of life insurance policies for eight persons.
(a) At the 98% confidence level, test whether annual income and the amount of life insurance policies are independent.
(b) Find the attained significance level.
(c) State any assumptions you have made in solving the problem.
Solution
Given dataset
annual income | life insurance |
42 | 150 |
58 | 175 |
27 | 25 |
36 | 75 |
70 | 250 |
24 | 50 |
53 | 250 |
37 | 100 |
I have done it in excel.
1.Here I have used Data analysis tab to find regression
SUMMARY OUTPUT | ||||||||
Regression Statistics | ||||||||
Multiple R | 0.92772 | |||||||
R Square | 0.860664 | |||||||
Adjusted R Square | 0.832796 | |||||||
Standard Error | 6.990796 | |||||||
Observations | 7 | |||||||
ANOVA | ||||||||
df | SS | MS | F | Significance F | ||||
Regression | 1 | 1509.358 | 1509.358 | 30.88439 | 0.002594 | |||
Residual | 5 | 244.3562 | 48.87123 | |||||
Total | 6 | 1753.714 | ||||||
Coefficients | Standard Error | t Stat | P-value | Lower 95% | Upper 95% | Lower 95.0% | Upper 95.0% | |
Intercept | 21.08904 | 4.831949 | 4.3645 | 0.007259 | 8.668121 | 33.50996 | 8.668121 | 33.50996 |
150 | 0.170137 | 0.030615 | 5.557372 | 0.002594 | 0.09144 | 0.248834 | 0.09144 | 0.248834 |
RESIDUAL OUTPUT | ||||||||
Observation | Predicted 42 | Residuals | ||||||
1 | 50.86301 | 7.136986 | ||||||
2 | 25.34247 | 1.657534 | ||||||
3 | 33.84932 | 2.150685 | ||||||
4 | 63.62329 | 6.376712 | ||||||
5 | 29.59589 | -5.59589 | ||||||
6 | 63.62329 | -10.6233 | ||||||
7 | 38.10274 | -1.10274 |
The equation is
Where
Here slope
intercept
2. The scatter plot and the least square regression line on graph using excel is
iii. Here mean
Standard deviation s
Confidence interval for
Conidence interval for