Chapter PI, Problem 23RE

To determine

To explain how this study demonstrates Simpson’s paradox.

Explanation of Solution

In the question, if we look only at the overall statistics it appears that the follow-up group is insured at much lower rate than those not traced as $11.1\%$ of the time compared with $16.6\%$ . But most of the follow-up group were black, who have a lower rate of being insured. When broken down by race the follow-up group actually has a higher rate of being insured for both blacks and whites. So, overall statistics is misleading and is so attributable to the difference in race make-up of the two groups.