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:
Family Income in
thousands of $
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
Since this is a number which closely approaches 1, we can deduce that there is a positive correlation between the SAT scores and income.