ECON1203

Business and Economic Statistics

TERM 3, 2020
Case Study: The Marriage Premium
MILESTONE 2
In the first milestone of this case study, you had the opportunity to know your
dataset and to understand some of the key characteristics of the players, their
demographics and income.

In your second meeting with the EqRA senior consultant, Dr. Rachel Ng,
discussed with you the objective of commissioning this study. The Board
members would like to understand the dynamics between marriage and
income. Keep in mind that the premium is being measured as a gain over
players of similar demographics, career stage and ability.

Task 1:
To further understand the dynamics between wages and the players’
demographics, Dr. Ng asks you to test your data against the following claims

a. Marriage & Age. The marriage premium has the greatest impact on
younger players and high performers and weak-to-no impact on older
players.

b. Marriage & Race. The marriage premium is a racial phenomenon

impacting on the wages of the black players only.

c. Marriage & Productivity. There is no correlation between marriage and

productivity, except for low performers who see a jump in performance
after marriage. (Here you may use the Productivity Index as a measure
performance). You may choose to define ‘low performers’ those in the
bottom first quartile of the distribution of performance.

d. Marriage & High achievers. At least 80% of the players with productivity
above the median level (as measured with the Productivity Index) are
married.
Task 2:
Anxious to get a quick answer, Dr. Ng asks that you simply test the claim of a
marriage premium by testing a null hypothesis of zero difference in the
average wages between married and unmarried players. Use simple linear
regression to test this claim. Report the result and explain to Dr. Ng why this is
not a good idea.
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As part of your reporting requirements please state your assumptions.

Remember to show all your working.

Please write a short report on the results of any hypothesis tests performed
and the interval estimates of the parameters. As part of your report you’ll need
to explain why and potential issues with this dataset and possible remedies for
any issues that may arise.

Keep in mind that this is a kind of a research exercise where you are dealing
with real dataset. There is no correct or wrong answer. BUT there is incorrect
use of statistical techniques and assumptions. Or worse, incorrect
interpretation of the results and misleading the Board! The latter is what we
want to learn to avoid.

Data
Please refer to the Milestone 1 document.

Hints
You may (if necessary) want to use a simplifying assumption of normality or
use the CLT. A useful statistical result is that the sum and difference of two
normal random variables is a normal random variable.

You may assume independence when necessary (for example between the
distribution of income of singles and that of married players!)

You may separate players into groups (along side age, performance and marital
status) to test the above claims (of differences between groups).
Guidelines for Milestone 2 report
For this Milestone 2 report there are seven main areas we will be looking for:

Introduction: which summarises what the purpose of this report and highlights
how this report is going to be structured. Remember to provide some
background information about the topic.

Hypothesis testing: Have you correctly defined the null and alternative
hypothesis, the decision rule, calculated the test statistics and concluded the
test.

Confidence intervals: Have you construct the intervals correctly, used the
correct distribution and make the correct conclusion?

Analysis and contents: Have you analysed and concluded correctly for each of
the tests and confidence intervals? Have you been able to say something about
how representative your sample is? Is it appropriate in the context of your
results and what can you say on this front? In other words do you have a
coherent content as well when you're weaving your results together?

Assumptions: Have you stated all the assumptions that are appropriate for
your conclusions/tests.

Limitations: What are the limitations of your results?

Conclusions: which should summarise the findings of your investigation and

any concluding comments.
Administrative Details
Length: Total length should not exceed 1500 words (not including tables
and graphs) and 10 pages (including table, graphs and appendices).
Please use 10pts to 12pts fonts. Your mark will be based on the
first 1500 words and first 10 pages. The rest will not be marked!

As a style guide, you may put some or all the tables/graphs as an

appendix and refer to them in your report as necessary. Include
only graphics/tables to substantiate your analysis/conclusions and
findings. In the process of preparing your work, you will go through
many tables and graphs, which are most probably not relevant for
Dr. Ng to see. So be very selective and make good use of the pages
limit! As a general guide, labels (including graphs, labels of axis),
and any captions, footnotes, titles, tables, any headers and footers
are included in your page limit but not in the word count.

Report The report will be marked out of 12.5 and will constitute 12.5% of
mark: your total mark for the course. There is a 2.5% allocated to Peer
and Self Review Task for Milestone 2.
Due date: You must submit only one electronic copy for both you and your
teammates to the course Moodle site by 23:55 (11:55 PM) of
13/11/2020 (Friday, WEEK 9).

Late 20% of the value of the project will be deducted for every day or
submissio part thereof that the hard copy is turned in after the deadline
n: (including the weekend). Projects submitted more than five days
late will not be marked and will be assigned a mark of zero. You
and your teammates should be working on the material regularly
before the due date. Extensions will only be granted in exceptional
circumstances and must be approved by the lecturer-in-charge.
For more details about late submission, see the Course Outline.

Plagia- Evidence of plagiarism will be treated extremely seriously:

rism: automatic and immediate failure in the course is a possible
penalty. See Part B of the course outline for further details about
UNSW’s policies on plagiarism. If you are in doubt about how to
identify or avoid plagiarism, follow the link to and complete the
self-paced Working with Academic Integrity module on Moodle.
Coverage: In this milestone, you are only expected to use the statistical
techniques developed in the text and lectures up until the end of
WEEK 8.

At last Please do enjoy and have fun uncovering the information that lay
behind the data in your hands. Don’t be afraid to be critical and to
think outside the box.