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Understanding the Correlation Between Household Eligibility for Food Stamps and Unemployment Rates

This overview explores the correlation between the median HHI (Household Income) and the percentage of households eligible for food stamps, as well as the relationship between food stamp eligibility and unemployment rates. We delve into scatterplots, which visually represent the strength and direction of these associations, and explain the properties of correlation, including how to calculate it using Excel's CORREL function. Understanding these correlations is vital for analyzing socio-economic factors and their impacts on household welfare.

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Understanding the Correlation Between Household Eligibility for Food Stamps and Unemployment Rates

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Presentation Transcript

  1. Correlation

  2. Median HHI and Percent of Households Eligible for Food Stamps

  3. Percent of Households Eligible for Food Stamps and Percent Unemployed

  4. A few words about Scatterplots • A Scatterplot displays the direction and strength of the association between two sets of quantitative data • The direction refers to whether there is a positive, negative, or no association between the data • The association is strong if the dots come close to being in a straight line • The association is weak if the dots don’t come close to being in a straight line

  5. A number called the correlation measures both the direction and strength of the linear relationship between two related sets of quantitative variables.

  6. Properties of Correlation • The correlation is written as r • Correlation requires that both variables be quantitative • A positive value for r means there is a positive relationship between the variables • A negative value for r means there is a negative relationship between the variables

  7. The value of the correlation is always between - 1 and + 1. • A strong relationship means the correlation is close to either - 1 or + 1 • There can be a strong positive relationship (r is close to 1), or a strong negative relationship (r is close to - 1) • A weak relationship means the correlation is closer to 0 than to either - 1 or + 1 • The value of r is affected by outliers

  8. Guess the Correlations:.67 .993 .003 -.975

  9. Excel Formula for Correlation: =CORREL(array1,array2) =CORREL(array1,array2) =CORREL(a1:a6,array2) =CORREL(a1:a6,b1:b6)

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