Case Example: The SAT and
Family Income Levels


What exactly does the infamous Scholastic Aptitude Test measure?  Previous statistical tests have come to the conclusion that there is no correlation between high scores on the SAT and career success.  But is there a correlation between high scores and the level of income of students' families?   The following is a sample of university students' SAT scores and their corresponding family annual incomes in the thousands of dollars:

SAT scores

1070

1470

1230

1100

1460

1510

900

1020

Family Income in
thousands of $

79

95

85

75

120

100

42

59

Excel is particularly helpful in solving for correlation and regression, as it contains built-in equations for both in the tools menu.

Correlation and Excel

When we plug our information into the formula, we find that

r  =.903

Since this is a number which closely approaches 1, we can deduce that there is a positive correlation between the SAT scores and income.


 

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