Income and housing. The Office of Federal

Chapter 7, Problem 31

(choose chapter or problem)

Income and housing. The Office of Federal HousingEnterprise Oversight (www.ofheo.gov) collects data onvarious aspects of housing costs around the UnitedStates. Here is a scatterplot of the Housing Cost Index ver-sus the Median Family Income for each of the 50 states. Thecorrelation is 0.65. a) Describe the relationship between the Housing Cost In-dex and the Median Family Income by state.b) If we standardized both variables, what would thecorrelation coefficient between the standardized vari-ables be?c) If we had measured Median Family Income in thou-sands of dollars instead of dollars, how would thecorrelation change?d) Washington, DC, has a Housing Cost Index of 548 anda median income of about $45,000. If we were to in-clude DC in the data set, how would that affect thecorrelation coefficient?e) Do these data provide proof that by raising the me-dian income in a state, the Housing Cost Index willrise as a result? Explain.