Hypothesis Testing and ANOVA
Assignment: Running an analysis of variance
Source: New data from OECD (“The Organisation for Economic Co-operation and Development”)
In this project I decided to analyse the relationship between Employment Rate* and Life Satisfaction Index*.
*Employment Rate= Variable "Work" -"It is the number of employed persons aged 15 to 64 over the population of the same age. Employed people are those aged 15 or more who report that they have worked in gainful employment for at least one hour in the previous week, as defined by the International Labour Organization – ILO." (source: OECD)
*Life Satisfaction Index= Variable "LifeSat" – “The indicator considers people's evaluation of their life as a whole. It is a weighted-sum of different response categories based on people's rates of their current life relative to the best and worst possible lives for them on a scale from 0 to 10, using the Cantril Ladder (known also as the "Self-Anchoring Striving Scale")” (source: OECD)
*Employment Rate= Variable "Work" -"It is the number of employed persons aged 15 to 64 over the population of the same age. Employed people are those aged 15 or more who report that they have worked in gainful employment for at least one hour in the previous week, as defined by the International Labour Organization – ILO."
*Life Satisfaction Index= Variable "LifeSat" – “The indicator considers people's evaluation of their life as a whole. It is a weighted-sum of different response categories based on people's rates of their current life relative to the best and worst possible lives for them on a scale from 0 to 10, using the Cantril Ladder (known also as the "Self-Anchoring Striving Scale")” (source: OECD)
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Alternate Hypothesis (Ha): There is an association between the employment rate and life satisfaction.
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Post hoc comparisons of mean number of Life Satisfaction Index:
1. Model Interpretation for ANOVA
When examining
the association between Life Satisfaction "LifeSat" (quantitative
response) and Employment Rate "WORK2" (categorical explanatory), an
Analysis of Variance (ANOVA) revealed that countries with the highest
Employment Rate have higher Life Satisfaction Index (Mean=7.2909, Stdev.=0.197253) compared to
those with the middle Employment Rate (Mean=6.4571, Stdev.=0.722936) and the lowest Employment Rate (Mean=5.9333, Stdev.=0.754983), F(2,31)=12.58, p<0.0001.
This
information proves that there is a relationship between Life Satisfaction and
Employment Rate.
2. Model Interpretation for Post Hoc ANOVA results:
ANOVA revealed that among 34 developed countries (my sample), Employment Rate "WORK2" (collapsed into 3 ordered categories, which is the categorical explanatory variable) and number indicating Life Satisfaction "LifeSat" (quantitative response variable) were significantly associated, F(2,31)=12.58, p<0.0001. Post hoc comparisons of mean number of Life Satisfaction Index revealed that the countries with Employment Rate higher than 70% reported significantly higher Life Satisfaction Index compared to countries with employment rate between "60-70%" and countries with employment rate lower than "60%". However, countries with employment rate between "60-70%" and countries with employment rate lower than "60%" had similar Life Satisfaction Index.
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