Exercise 44 summarizes results from a survey of stockholders following the October 1987 stock market crash.
(a) Quantify the amount of association between the respondents’ stock ownership and expectation about the chance for another big drop in stock prices.
(b) Reduce the table by combining the counts of very likely and somewhat likely and the counts of not very likely and not likely at all, so that the table has three rows: likely, not likely, and unsure. Compare the amount of association in this table to that in the original table.
Exercise 44
Poll After the collapse of the stock market in October 1987, Business Week polled its readers and asked whether they expected another big drop in the market during the next 12 months.12 The data table for this question has two variables. One indicates whether the reader owns stock and the other gives the anticipated chance for another drop.
(a) Find the contingency table defined by stock ownership and the anticipated chances for a big drop in the market. Include the marginal distributions. (b) Did stockholders think that a drop was either somewhat likely or very likely?
(c) Did nonstockholders think that a drop was either somewhat likely or very likely? (d) Do the differences between parts (b) and
(c) Make sense? Do these differences imply that the two variables summarized in the table are associated?