A Bank wishes to determine the mean income of its credit card holders and more specifically wants to investigate whether there are any differences in the mean income between males and females. Confidence interval as a statistical inference method has been considered to respond this objective. You are required to 1) Comment on the choice of confidence intervals as a statistical inference method for the above. Describe how you will proceed to determine the corresponding confidence intervals. 2) Explain how you would use confidence intervals as evidence suggesting that in average males and females income differ. Use Numerical examples to illustrate as and when required. (Word count around 250 words)

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A Bank wishes to determine the mean income of its credit card holders and more specifically wants to investigate whether there are any differences in the mean income between males and females. Confidence interval as a statistical inference method has been considered to respond this objective.  You are required to  1) Comment on the choice of confidence intervals as a statistical inference method for the above. Describe how you will proceed to determine the corresponding confidence intervals.  2) Explain how you would use confidence intervals as evidence suggesting that in average males and females income differ.  Use Numerical examples to illustrate as and when required.  (Word count around 250 words)

Tiefdruckot · Accepted Answer

Step 1  Since, we have to investigate whether there are any differences in the mean income between males and females we perform the t-test for two groups where the test statistics is given by,  t=(x1―−x2―)−(μ1−μ2)(n1−1)s12+(n2−1)s22n1+n2−2(1n1+1n2)  Where:  n1, n2= sample size for the male female groups  s1, s2= sample standard deviations for the two groups  x1―, x2―= sample means for the male and female groups.  Step 2  To compute confidence intervals we can choose the confidence levels to be 0.01, 0.05, 0.10, and 0.20.  Thus, we can compute 99%, 95%, 90%, 80% confidence intervals.  Using the above t-test statistic we can compute the confidence interval as below:  CI=(x1―−x2―)±tα2, (n1+n2−2)(n1−1)s12+(n2−1)s22n1+n2−2(1n1+1n2)  Step 3  Based on the confidence interval the following conclusions can be made:  If the calculated confidence interval does not contain zero in it, then we can conclude that the average males and females’ income differ.  If the calculated confidence interval contains zero in it, then we can conclude that the average males and females’ income do not differ.

Matthew Rodriguez · Accepted Answer

Step 1  Suppose, random variables X and Y denote income of male and female credit card holders respectively.  Here, two different groups (male and female) are used to collect data. Further we do not know population standard deviation (or variance). So, we have to use test statistic corresponding to two sample t-test.  Corresponding test statistic is given by  t=(x―−y―)−(μx−μy)s×1nx+1ny  Here,  First sample size nx  Second sample size ny  Sample mean of first sample x―  Sample mean of second sample y―  Pooled sample standard deviation is given by  s=(nx−1)×sx2+(ny−1)×sy2nx+ny−2  Degrees of freedom v=nx+ny−2  For 100(1−α)% confidence interval we have,  P(−tα2, v&amp;lt;t&amp;lt;tα2, v)=1−α Using R-code 1−1−α2,v  ⇒P(−tα2, v&amp;lt;(x―−y―)−(μx−μy)s×1nx+1ny&amp;lt;tα2, v)=1−α  ⇒P(−stα2, v1nx+1ny&amp;lt;(x―−y―)−(μx−μy)&amp;lt;stα2, v1nx+1ny)=1−α

A Bank wishes to determine the mean income of its credit car

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