BUSINESS STATISTICS

Group Mid-term Exam

Question 1
Consider the variable income in gss.sav file (the variable is total family income in the year
before the survey).
1. Make a frequency table for the variable. Does the frequency table make sense? Does it
make sense to make a histogram of the variable? A bar chart?
2. What is the scale of measurement for the variable?
3. What descriptive statistics are appropriate for describing this variable and why? Does it
make sense to compute a mean?
4. Discuss the advantages and disadvantages of recording income in this manner. Describe
other ways of recording income and the problem associated with each of them.

Answer

1. The frequency table for the variable.

TOTAL FAMILY INCOME FOR LAST YEAR

Frequency Percent Valid Percent Cumulative

Percent

Valid UNDER $1 000 17 1.2 1.3 1.3

$1 000 TO 2 999 17 1.2 1.3 2.5

$3 000 TO 3 999 9 .6 .7 3.2

$4 000 TO 4 999 7 .5 .5 3.7

$5 000 TO 5 999 13 .9 1.0 4.7

$6 000 TO 6 999 19 1.3 1.4 6.1

$7 000 TO 7 999 17 1.2 1.3 7.3

$8 000 TO 9 999 40 2.8 3.0 10.3

$10000 TO 12499 58 4.1 4.3 14.5

$12500 TO 14999 56 3.9 4.1 18.7

$15000 TO 17499 50 3.5 3.7 22.4

$17500 TO 19999 54 3.8 4.0 26.4

$20000 TO 22499 42 3.0 3.1 29.5

$22500 TO 24999 59 4.2 4.4 33.8

 $25000 TO 29999 79 5.6 5.8 39.7

$30000 TO 34999 86 6.1 6.4 46.0

$35000 TO 39999 82 5.8 6.1 52.1

$40000 TO 49999 119 8.4 8.8 60.9

$50000 TO 59999 108 7.6 8.0 68.8

$60000 TO 74999 111 7.8 8.2 77.0

$75000 TO $89999 66 4.7 4.9 81.9

$90000 - $109999 45 3.2 3.3 85.2

$110000 OR OVER 76 5.4 5.6 90.8

REFUSED 124 8.7 9.2 100.0

Total 1354 95.4 100.0

DK 49 3.5
Missing NA 16 1.1
Total 65 4.6
Total 1419 100.0

- The frequency table does really make sense since the variable income is the continuous
variables. They are usable and provide us the information which are understandable.
However, raw data provide too much information that causes many difficulties in data
analysis. Summarised information are concise and reflect the accurate view of original
data. Moreover, all the frequency, the percentage, and the cumulative percentage help us
clear away details and determine the group of family income in a general way.

- The Bar Chart (Total family income as the variable):

- The Histogram (Total family income as the variable):

- The histogram with the total family income as the variable makes sense because the
variable income is continuous data and the best tool for it to analyze is Histogram. It
indicates the pattern of family income, such as the density of the frequency at which the
spectrum of family income is greater than the other, etc. This histogram above uses the
same value, since the horizontal axis is the mark value, not the value of this variable. If
we use the value of this vector for the horizontal axis of the histogram, the bars within are
not equal to each other.
- The bar chart of this variable doesn’t make sense if we make it in order to analyze the
data. Since the bar chart is useful for qualitative data and discrete data, not continuous
data.
=> It makes sense to make a histogram rather than bar chart because the best tool for
continuous data is Histogram.

b, The scale of measurement for the variable income is ordinal scale. Because we
can categorize and rank the data in an order from the lowest income class to the highest
income class, but we cannot say anything about the intervals between the rankings. Such
as the income levels range from quintiles with incomes below $ 1000 to those with
incomes above $ 110000 and the gap between the quintiles is unequal.