Problem Below is a table on “Household Income at Selected Percentiles in 2014 Dollars Adjusted for Inflation for All Races/Ethnicities” obtained from the U.S. Census Bureau. 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 50th Percentile 47,896 48,483 50,030 48,650 53,290 50,968 57,826 55,569 54,944 53,657 The data in excel format is attached as an excel document. a) What is the definition of household income as defined by the U.S. Census Bureau? b) What does it mean by “2014 Dollars Adjusted for Inflation?” c) What is the U.S. Census Bureau and is this a reliable source of data? Why would we use data from the U.S. Census Bureau and not the Internal Revenue Service?
Problem
Below is a table on “Household Income at Selected Percentiles in 2014 Dollars Adjusted for Inflation for All Races/Ethnicities” obtained from the U.S. Census Bureau.
1969 1974 1979 1984 1989 1994 1999 2004 2009 2014
50th
Percentile 47,896 48,483 50,030 48,650 53,290 50,968 57,826 55,569 54,944 53,657
The data in excel format is attached as an excel document.
a) What is the definition of household income as defined by the U.S. Census Bureau?
b) What does it mean by “2014 Dollars Adjusted for Inflation?”
c) What is the U.S. Census Bureau and is this a reliable source of data? Why would we use data from the U.S. Census Bureau and not the Internal Revenue Service?
d) What is a percentile? Describe using the mathematical definition of percentile what it means to be in the 10th, 50th or 95th percentiles for Household Income.
e) Construct a
• Write a paragraph describing the relationship you observe between year and 50th percentile income.
• Describe the scatterplot in terms of pattern, direction and strength of association between t and h.
f) Using R software or EXCEL, find the equation of the best fit line using a least squares linear regression model for the data with h representing the Household Income and t representing the year since 1969.
• For the equation, write interpretation of the slope of the line and the y-intercept of the line. Make sure to describe the slope and the y-intercept within the context of this problem and to include units. Also describe why these numbers make sense or do not make sense in the context of this problem.
g) Use the equations found in part (f), to predict the 50th percentile Household Income in 2017. Explain why the model may or may not be accurate predictor for Household Income in the year 2017.
h) Use the equations found in part (f), to predict the 50th percentile Household Income in 2025. Explain why the model may or may not be accurate predictor for Household Income in the year 2025.
i) Calculate the percent change in 50th percentile Household Income between 1969 and 2014.
% ?ℎ????=????? ?????−????????? ?????????????? ?????×100
Describe the percent change in household income.
j) What can you conclude from the analysis you performed in this project on income distribution in the United States? Write a paragraph summarizing your findings. Remember this is a mathematical analysis and not an opinion piece but you can use terms that are regularly found in newspaper articles about “Middle Class”, “Income Inequality”, etc. However, if you use those terms, you must define them in your paragraph.
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