Price-Quality Inference of

Education

SUBMITTED TO: SUBMITTED BY:

MD. FARHAN IMTIAZ Md. Fatin Ishraq (Roll-17)
Assistant Professor S.M. Ahsanul Haque Rifat (Roll-25)
IBA, DU Tasnuva Kinnori (Roll-31)
S.M. Sabbit Hossain (Roll-69)
Naziba B. Ali (Roll-93)
K101: BUSINESS STATISTICS
12 November 2019
To
Md. Farhan Imtiaz
Assistant Professor
IBA
University of Dhaka

Subject: Letter of transmittal for Business Statistics course term paper.

Dear Sir,

With due respect and humble submission, we aspire to draw your kind consideration to
the fact that we are the students of Section A, from BBA-27th, we have prepared this
report titled “Price-Quality Inference of Education" that had been assigned to us as a
requirement for the completion of the course “Business Statistics” (Course Code:K101).
The report has been prepared on the basis of data collected from primary survey and
various secondary databases. It provides us an insight into the relationship between cost
of education, institution reputation, experience etc. and beginning salary of the graduates
of the top three private universities. The report was a wonderful learning experience for
us and we sincerely thank you for giving us the opportunity to do so.

Please note that no part of this report will be shared or republished without your
authorization.

Sincerely yours,
Mohammad Fatin Ishraq (Roll 17)
S.M. Ahsanul Haque Rifat (Roll-25)
Tasnuva Kinnori (Roll-31)
S.M. Sabbit Hossain (Roll-69)
Naziba Ali (Roll-93)

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Executive summary
As per modern definition, quality education is something which helps a nation build quality
workforce for boosting its economy. In Bangladesh, families stress over undergraduate
educational institutions on the basis of 3 factors: i) Reputation of the university ii) Cost of
education iii) Future prospects. So, our study’s main focus is to test through regression
analysis, whether those three factors have an impact on a graduate’s beginning salary, the
graduates being BBA graduates from three top ranked private universities of Bangladesh: i)
North South University ii) Independent University of Bangladesh iii) BRAC University.

The collected information was mostly from primary source. Questionnaire was disseminated
among BBA grads of the selected three private universities. 25 people responded, i.e. our
sample size is 25.

We at first conducted Regression analysis where our dependent variable being Beginning
Salary and the independent variables being:
i) Cost of Education
ii) CGPA
iii) Gender
iv) Experience from internships
v) Reputation of the university

From the test, we found that all the factors excluding no. iv and v are significant predictors
i.e. the beginning salary of a BBA graduate depends on those 3 factors.

The null hypothesis for our ANOVA test was if the mean beginning salary of the BBA grads
from our survey universities was equal. After conducting the test, we rejected the null
hypothesis i.e. the mean beginning salaries of the survey universities was not equal.

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Contents
Executive summary................................................................................................................................ii
Chapter 1: Introduction.........................................................................................................................1
1.1 Title of the Study:............................................................................................................................1
1.2 Rationale of the Study:....................................................................................................................1
1.3 Statement of the problems:............................................................................................................2
1.4 Scope of the study:..........................................................................................................................2
1.5 Limitations of the study:..................................................................................................................2
1.6: Objective of the study:...................................................................................................................2
1.7 Methodology of the study:..............................................................................................................3
1.8 Selection of population:...................................................................................................................3
1.9 Statistical Application:.....................................................................................................................3
Chapter 2: Analysis................................................................................................................................3
2.1 Multiple Regression analysis to determine relationship between dependent and independent
variable..................................................................................................................................................3
2.2 ANOVA test to compare beginning salary of graduates from different Universities........................7
Chapter 3: Findings..............................................................................................................................10
Chapter 4: Conclusion..........................................................................................................................10

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Chapter 1: Introduction

1.1 Title of the Study: ‘An Analysis on Price-Quality Inference of

Education’

1.2 Rationale of the Study:

Education is a huge business in our country. Except for public universities, all other

institutions are by far commercial. Current trends suggest an increased inclination of students

towards pursuing a BBA degree, to cope with which many private universities are

introducing BBA in their list of academic offerings, with the tuition fees varying from

institution to institution. Pursuing BBA degree at a private university is a costly affair. It is

important to understand the extent to which such investments bring results, in other words, to

understand to what degree the price determines the quality of education, which in turn

impacts a student's chances of becoming professionally successful.

1.1.1 Benefits for a student:

This study will allow students to make better financial and rational decisions for higher

education choices in the future, based on clear conceptions of an institution's quality of

education and consequent professional success of its alumni's.

1.1.2 Benefits for the business sector:

This report will aid the private academic institutions as well as it will assist them to compare

themselves with other institutions in the field and identify the areas requiring improvement.

Thus, this paper will provide them the scope to make better use of their available funds to

provide a service to their students which will help the students achieve a successful

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professional life. Consequently, students will show better academic performance and also

will be ensured an environment that maximizes the chance to show their true potential. This

will also allow institutions to improve their reputation.

1.3 Statement of the problems:

This study is designed in a way to answer questions like:
i. Is expenditure in education directly proportional to better quality education?
ii. Does higher educational expenditure ensure job security?
iii. What percentage of professionals recruited at established companies and firms across
the country stem from private academic backgrounds?

1.4 Scope of the study:

The study covers the tuition fees, recruitment rates of the graduates at renowned
organizations of the country and their estimated salaries after recruitment for BBA programs
at private universities like North South University, BRAC University and Independent
University Bangladesh.

1.5 Limitations of the study:

i. Many other variables, such as, extra-curricular activities, cultural club, various fest
can affect the quality of education but they haven’t been considered in this study due
to their minor attribute. Only tuition fee and course fee have been assessed.

ii. Also, to some extent not all graduates of the institutions would be inclined towards
disclosure of data related to recruitment, salaries etc. Besides, we weren’t provided
access to the relevant information for some institutions due to confidentiality issues.

iii. Statistical findings regarding significance of gender, experience etc. independent

variables might not represent the general scenario due to ratio of male-female subjects
and subjects without experience.

1.6: Objective of the study:

General Objective:
Determining the correlation between cost and quality education

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Specific Objectives:
i. Examining the factors that influence people to believe in the interactive relationship
between cost of education and its quality
ii. Assessment of relationship between job security and higher educational expenses
iii. How education sector is being gradually commercialized
iv. Knowing about recruiters’ viewpoint about this aspect

1.7 Methodology of the study:

Sources of primary data:
i. Teachers’ and students’ survey
ii. Conducting interviews with graduates of the institutions
iii. Questionnaires

Sources of secondary data:

i. Websites of the institutions and various companies.

1.8 Selection of population: Convenience sampling technique has been

utilized. 3 private universities have been surveyed in this regard.

1.9 Statistical Application: T-test, Multiple Regression and ANOVA test is

conducted. Graphs and Tables have also been presented.

Chapter 2: Analysis

2.1 Multiple Regression analysis to determine

relationship between dependent and independent
variable

Regression Description

The process through which this study has been conducted is by placing the salaries, Cost of
education, CGPA into ranges. Furthermore, for qualitative variables, the independent
variables that were used are- Gender, Internship experiences and University rankings.

Here, the dependent variable is Salary which is denoted by Y.

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Furthermore, the independent variables are the following-
Cost of education = X1
Gender = X2
CGPA = X3
Internship Experience = X4
Reputation of University = X5

For the purpose of collecting the data for cost of studying and CGPA, we have used ranges.
Furthermore, we have specified values for those particular ranges so that it can be used in the
multiple regression analysis.
The information is given below-

COST OF EDUCATION:

VALUE ASSIGNED COST OF EDUCATION

4 OVER 10 LAKHS
3 8-10 LAKHS
2 6-8 LAKHS
1 4-6 LAKHS

CGPA:

VALUE ASSIGNED CGPA

5 3.75-4.00
4 3.5-3.74
3 3.25-3.49
2 3.24-3.00
1 2.5-2.99

Gender:
It is the dummy variable and has been assigned the following values-

VALUE ASSIGNED GENDER

0 MALE
1 FEMALE

Internship Experience:

VALUE ASSIGNED INTERNSHIP STATUS

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 0 Didn`t have internship
1 Had internship

Reputation of the University:

VALUE ASSIGNED UNIVERSITY RANK

1 First
2 Second
3 Third

REGRESSION OUTPUT

Variables Entered/Removeda
Variables Variables
Model Entered Removed Method
1 CGPA, Gender, . Enter
cost_of_edu,
Reputation_of_U
ni,
Internship_exper
ienceb

a. Dependent Variable: Salary

b. All requested variables entered.

Model Summary
Adjusted R Std. Error of the
Model R R Square Square Estimate
1 .917a .841 .799 .420

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a. Predictors: (Constant), CGPA, Gender, cost_of_edu, Reputation_of_Uni, Internship_experience

From the output we can see that the value of R2 is 0.841 which means that 84.1% of
variation in the dependent variable Y (salary) can be explained by the set of the
independent variables X1, X2, X3, X4, X5.

ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 17.686 5 3.537 20.037 .000b
Residual 3.354 19 .177
Total 21.040 24

a. Dependent Variable: Salary

b. Predictors: (Constant), CGPA, Gender, cost_of_edu, Reputation_of_Uni, Internship_experience

The p-value from the table is 0.000. Because the p-value is less than the significance level,
we reject the null hypothesis and conclude that at least one of the regression co-efficients is
not equal to zero.
Next, we evaluate the individual regression co-efficients.

Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) 1.589 .505 3.148 .005
cost_of_edu .289 .078 .385 3.703 .002
Gender .972 .283 .424 3.433 .003
Reputation_of_Uni .174 .131 .147 1.332 .198
Internship_experience -.063 .119 -.064 -.526 .605
CGPA .428 .061 .661 7.015 .000

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a. Dependent Variable: Salary

Cost of education, gender and CGPA are statistically significant predictors of beginning
salary whereas Internship experience and reputation of university are not significant
predictors.

From the provided data in the regression output, we can now form the multiple regression
equation,

Y= 1.589 + 0.289X1 + 0.972X2 + 0.428X3 - 0.063X4 + 0.174X5

The interpretations are as follows:
1. An increase of BDT 10,000 in the cost of education will increase the beginning salary
by BDT 2890.
2. For a male graduate, the beginning salary will increase by BDT 9720.
3. Internship experience is negatively related to beginning salary of graduates.
4. An increase in CGPA will increase the beginning salary by 42.8%.

2.2 ANOVA test to compare beginning salary of

graduates from different Universities

ONE WAY ANOVA TEST

The aim of this study is to observe the relationship between graduates of 3 different
universities and their beginning salary. Beginning salary has been used as the dependent
variable and the university graduates as the independent variables. Next, an ANOVA test has
been carried out to determine if the mean of the three universities are statistically significant
or not.

H0: The mean beginning salary is same for the graduates of 3 different universities.
H1: The mean beginning salary is not same for the graduates of 3 different universities.

Descriptive Statistics
Descriptive statistics has been conducted in order to observe the distribution of the data.
Table 1 displays the summary of the descriptive statistics.

Table 1: Descriptive Statistics

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 95% Confidence Interval for
Std. Std. Mean
N Mean Deviation Error Lower Bound Upper Bound
NSU graduate 12 4.58 .669 .193 4.16 5.01
BRAC 8 3.50 1.069 .378 2.61 4.39
graduate
IUB graduate 5 4.80 .447 .200 4.24 5.36
Total 25 4.28 .936 .187 3.89 4.67

The study sample consisted of 25 participants. There are 3 independent variables- NSU
graduate, BRAC graduate and IUB graduate. NSU graduate scores ranged from 4.16 to 5.01
with a mean of 4.58 and a standard deviation of .669. BRAC graduate scores ranged from .
261 to .439 with a mean of 3.50 and a standard deviation of 1.069. IUB graduate scores
ranged from 4.24 to 5.36 with a mean of 4.80 and a standard deviation of .447.
In particular, the data analysis shows that the subjects in the IUB graduate group show a
higher beginning salary than subjects in the other two groups. However, the key question is
whether the difference in mean scores reaches significance.

Homogeneity of variances
A requirement for the ANOVA test is that the variances of each comparison group are equal.
We have tested this using the Levene statistic.
In our testing, the significance value of the Levene statistic based on a comparison of
medians is .055 which is not a significant result. This implies that the requirement of
homogeneity of variance has been met and the ANOVA test can be considered to be robust.

Table 2: Test of Homogeneity of Variances

Levene Statistic df1 df2 Sig.
Salary Based on Mean 3.317 2 22 .055
Based on Median 1.004 2 22 .383
Based on Median and with 1.004 2 18.837 .385
adjusted df
Based on trimmed mean 3.225 2 22 .059

F Statistics (ANOVA result)

A p value of less than .05 was required for significance. The ANOVA was significant F (2,
22) = 5.873, p= 0.009 which is less than 0.05. Thus, this result allows us to reject the null
hypothesis H0.

Table 3: ANOVA
Salary

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 Sum of Squares df Mean Square F Sig.
Between Groups 7.323 2 3.662 5.873 .009
Within Groups 13.717 22 .623
Total 21.040 24

That is, there is a statistically significant difference between the means of the different
categories of the graduates variable.

Post Hoc Tests

As we don’t know between which of the various pairs of means the difference is significant,
we take a look at the result of the post hoc Tukey HSD test.

In our example, the Tukey HSD portrays that it is the mean difference between the NSU
graduates and BRAC graduates that reaches significance due to the p-value .034, which is
less than the standard .05 alpha level.Also, the mean difference between IUB graduate and
BRAC graduate is even more significant due to a lesser p-value of 0.022.

Table 4: Multiple Comparisons

Dependent Variable: Salary
Tukey HSD
95%
Mean Confidence
(I) (J) Difference (I- Interval
University_graduate University_graduate J) Std. Error Sig. Lower Bound
*
NSU graduate BRAC graduate 1.083 .360 .017 .18
IUB graduate -.217 .420 .865 -1.27
*
BRAC graduate NSU graduate -1.083 .360 .017 -1.99
IUB graduate -1.300* .450 .022 -2.43
IUB graduate NSU graduate .217 .420 .865 -.84
*
BRAC graduate 1.300 .450 .022 .17

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Chapter 3: Findings
FINDINGS
In the analysis section of the study, two different statistical analyses have been conducted-
Multiple Regression Analysis and ANOVA test. Multiple Regression Analysis determined
the significant predictors of beginning salary whereas the second test- ANOVA examined if
there is a difference among mean beginning salary of the graduates from three different
universities.

Multiple Regression Analysis: The output of this analysis is interpreted using the
significance level. The obtained result is: CGPA is the most significant predictor with the
least p value. Then the cost of education and gender comes with the second and third least p-
value respectively. The significance is based on the degree to which these independent
variables affect the beginning salary.

ANOVA Test: The aim of this study is to observe the relationship between the graduates of 3
different universities and their beginning salary. The data analysis shows that there is
difference between the mean salary of NSU, IUB and BRAC graduates. Furthermore, it has
been found that the subjects in the IUB graduate group show a higher beginning salary than
subjects in the other two groups.

Chapter 4: Conclusion
From the findings of the tests, it could be assumed that CGPA of the subjects influenced their
beginning salaries the most, followed by cost of education. Again, subjects in the IUB
graduate group were observed to show a higher mean beginning salary than the other
subjects. Disregarding the limitations of the study, in conclusion it can be said that though
cost of education does play a role in influencing graduates' beginning salary, a higher CGPA
is the most influential factor.

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