For Exercises 2.23 and 2.24, see page 75; and for 2.25 and 2.26, see pages 77–78.

Question 2.35

2.35 Education spending and population with logs

In Example 2.3 (page 66), we examined the relationship between spending on education and population, and in Exercise 2.23 (page 75), you found the correlation between these two variables. In Example 2.6 (page 69), we examined the relationship between the variables transformed by logs.

edspend

  1. Compute the correlation between the variables expressed as logs.
  2. How does this correlation compare with the one you computed in Exercise 2.23? Discuss this result.

2.35

(a) . (b) The correlation went up from 0.9798 before taking the logs to 0.9808 after. Although the correlation went up a little bit, the log didn't help much with the explanation of the data.