Analytics Case Description - Quang Nguyen (1)

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California State University, Fullerton *

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361A

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Economics

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May 28, 2024

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docx

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Uploaded by ColonelLightning14001

Consumer Debt Payments Recent studies indicated that American consumers have an average monthly debt payment of around $1,000. However, a survey of 26 metropolitan areas in the United States found that each metropolitan area exhibits variations in the average debt payment. Madelyn Davis, an economist, believes about that it because of the effect of income, and unemployment rate.Therefore, this study designed to investigate the relationship and effect between debt payments to income and debt payments with the unemployment rate through the data of 26 metropolitan areas in the United States collected by Madelyn Davis. We will discuss some variables included in the case: 1. Metropolitan area is the categorical variable 2. Household Income in dollars $ 3. Unemployment rate in percentage % 4. Average monthly debt payment in dollars $ Exhibit 1: This descriptive statistic is designed to help us identify the outliers. (2.1) (2.2) (2.3) Exhibit 2: The box plots are designed to identify the outliers in the data in order to identify which metropolitan areas are significantly different from the average. According to the box plots, debt payments (2.3) have no outliers. However, unemployment rates (2.2) have two outliers, which are Miami and Detroit. In addition, Washington, D.C., appeared to be an outlier in

household income (2.1) . Therefore, Washington, D.C., has a significantly higher income than other metropolitan areas, and Miami and Detroit have higher unemployment rates than others. (3.1) (3.2) Exhibit 3: The summary output of Debt Payment - Household Income (3.1) and Debt Payment - Unemployment (3.2) are created to help us identify the regression line, which will help us understand more about the relationship between them. (4.1) (4.2) Exhibit 4: The charts and simple regression line above demonstrated the relationship between income household and debt payments along with debt payments and the unemployment rate. The first graph (4.1) shows no pattern or relationship between debt payments and the unemployment rate and unemployment. The second graph (4.2) shows a weak positive correlation between debt payments and income; as income rises, debt payments also tend to go up. Conclusion There is no relationship between debt payments and the unemployment rate. However, there is a weak relationship between debt payments and income. As income levels increase, there is a corresponding increase in debt payments.

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