Over the past decade, there has been a strong positive correlation between teacher salaries and prescription drug cost. (a) Do you think paying teachers more causes prescription drugs to cost more? Explain. (b) What lurking variable might be causing the increase in one or both of the variables? Explain.
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Over the past decade, there has been a strong
(a) Do you think paying teachers more causes prescription drugs to cost more? Explain.
(b) What lurking variable might be causing the increase in one or both of the variables? Explain.
a) Even though there is a strong positive correlation between teacher salaries and prescription drug costs, it can not be concluded that paying teachers more causes prescription drugs to cost more as correlation does not imply causation. This means that even if there is a correlation between two variables, it is not necessary that there is a cause-and-effect relationship between them. The high value of correlation may be due to any other variable that is affecting these two variables but is not estimated in the analysis.
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