Chapter 12.2, Problem 21E

The report “Education Pays 2016” (The College Board, trends.collegeboard.org/sites/default/files/education-pays-2016-full-report.pdf, retrieved May 27, 2017) provided information on education level and earnings for a sample of adult Americans who are employed full-time. Data consistent with summary percentages given in the report are summarized in the accompanying table. Suppose this data resulted from a representative sample of 1000 working adults whose highest level of education was a high school diploma, an Associate degree, or a Bachelor’s degree. Each person in the sample was classified according to education level (high school diploma, Associate degree, or Bachelor’s degree) and yearly income with possible categories of less than $20,000, $20,000 to $39,999, $40,000 to $59,999 and $60,000 or more. Is there evidence of an association between income category and education level? Test the appropriate hypotheses using a 0.05 significance level.