I'm having some fun with Applied Regression Analysis, especially with one of the questions I got for the assignment I need to turn in next week:
Question 7: MBA Rankings Business Week and U.S. News and World Report publish rankings of the top 20 Business
Schools. The Business Week overall ranking is based on rankings obtained from students and from firms that recruit MBAs. Along with the rankings, the magazine reports information
about the cost of getting an MBA degree and the graduates’ average starting salaries. The file rank.xls contains data on the 1992 Business Week and U.S.News rankings. It also contains data on the overall cost of getting an MBA and the average entry salaries for graduates of the top 20 schools in that year.
(a) What is the correlation between overall cost and entry salary?
(b) Plot a scatter plot of salary versus cost. What do you see?
(c) We are interested in answering the question “is there a payoff from spending more?”
by running a regression. What is the slope estimate? What do you conclude based
on the value of the slope estimate alone?
(d) Do you think you need to be careful when interpreting the result from point (c)? (Hint:
what does the scatter plot from (b) suggests to you?)