EXAMPLE 10.6 Correlation between Log Income and Years of Education

CASE 10.1 The sample correlation between log income and education level is from a sample of size . We can use Table G to test

For the row , we find that the -value for lies between 0.005 and 0.01.

We can get a more accurate result from the Excel output in Figure 10.5 (page 492). In the “EDUC” line, we see that with two-sided -value 0.0164. That is, for our one-sided alternative.

Finally, we can calculate directly from as follows:

If we are not using software, we can compare with critical values from the table (Table D) with 80 (largest row less than or equal to ) degrees of freedom.