Consumer Research Stats Case Analysis Essay

1376 Words 6 Pages
Consumer Research, Inc. is investigating whether there is any correlation between specific characteristics of credit card users and the amount these users charge on credit cards. Their objective is to determine if these characteristics can accurately predict the annual dollar amount charged by credit card users. Data was collected from a sample of 50 credit card consumers presenting information on the annual income (referred as Income), size of household (referred as Household), and the annual credit card charges (referred as Charges) for these consumers. A statistical analysis; including a descriptive, simple regression, and multiple regression tests, of this data was performed and the findings are presented below. Due to the …show more content…
Reviewing the correlation coefficients, Household appears to have a slightly stronger relationship to the amount charged with a .75 correlation compared to Income's correlation strength of .63.

In performing just a basic descriptive analysis of the data, it would appear that a consumer's annual income could be used as an indicator of how much they will charge on a credit card. This is consistent with beliefs that the more money a person makes the more likely they will spend. It is also not surprising to see consumers who reside in larger households will spend more. Further investigation of each of these characteristics was performed using a simple regression analysis to determine if either of these two characteristics could be used to predict the annual credit card charges. Results from this analysis are consistent with the findings of the descriptive analysis and support that, individually, Income and Household do have a positive relationship with credit card charges. A summary of the findings from the simple regression analysis follows.

Annual Income's relationship and strength of predictability for Annual Charges:
A model equation of Annual Charges = 40.48x + 2,204 can be used to predict the annual credit card charges based on just the consumer's annual income. The model indicates that for with each additional $1000 dollars of Income, Charges are expected to increase by $40.48, when the Size of Household is held

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