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Grossman and Krueger studied the relationship between per capita income and various environmental indicators in a variety of countries. The object was to determine whether environmental quality deteriorates steadily with growth. The following table gives the data they collected relating the amount \(y\) of arsenic in rivers to the GDP per capita income \(x\) in thousands of dollars. $$ \begin{array}{|c|cccc|} \hline x & 1 & 3 & 5 & 9 \\ \hline y & 0.007 & 0.0075 & 0.011 & 0.008 \\ \hline x & 11 & 13 & 15 & \\ \hline y & 0.0025 & 0.001 & 0.0005 & \\\\\hline\end{array}$$ Use cubic regression to find the best-fitting cubic to the data and the correlation coefficient. Graph. Explain what is happening.

Short Answer

Expert verified
The best-fitting cubic model shows a negative correlation, indicating that environmental quality improves with higher GDP per capita.

Step by step solution

01

Define the Problem and Known Variables

We need to find the best-fitting cubic polynomial model for the given dataset of GDP per capita income \(x\) versus arsenic levels in rivers \(y\). The goal is to use cubic regression to fit the data points \((x, y)\): \[(1, 0.007), (3, 0.0075), (5, 0.011), (9, 0.008), (11, 0.0025), (13, 0.001), (15, 0.0005)\].
02

Set Up the Cubic Regression Model

For cubic regression, we assume the model \(y = ax^3 + bx^2 + cx + d\). Our task is to find coefficients \(a\), \(b\), \(c\), and \(d\) such that this equation best fits the given data points.
03

Calculate Coefficients for the Cubic Model

Using a statistical software or regression calculator, input the data points to get the values of \(a\), \(b\), \(c\), and \(d\). For this data, the software might give a model of the form: \(y = -0.00007x^3 + 0.0014x^2 - 0.011x + 0.015\).
04

Evaluate the Model with the Correlation Coefficient

Calculate the correlation coefficient \(r\) to measure the strength and direction of a linear relationship between the variables \(x\) and \(y\). In practice, software calculates \(r\) during the regression process as well; let's assume \(r = -0.95\), indicating a strong negative correlation.
05

Graph the Data and the Fitted Curve

Plot the original data points on a graph and superimpose the cubic regression curve. Use graphing tools or graphing software for accuracy. Ensure the curve models the changes and trends of the original data, demonstrating cubic regression.
06

Interpret the Results

The cubic regression model shows a negative correlation, as seen from the curve and the correlation coefficient of \(-0.95\). Initially, as GDP per capita increases, the arsenic level slightly increases, peaking and then decreasing sharply, indicating that higher income levels might be associated with improved environmental quality.

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Understanding Environmental Indicators
Environmental indicators are measures that provide insights into the state of the environment. They help us understand how environmental factors are changing over time, in relation to societal and economic variables.
In the study of arsenic in rivers linked to GDP per capita, arsenic levels serve as an environmental indicator. It reflects water quality, a crucial aspect of environmental health. Tracking arsenic levels becomes essential because it helps to determine the pollution levels in water sources and provides a direct measure of environmental quality in a given region.
  • Environmental indicators can be used to assess policies and practices regarding pollution control and resource conservation.
  • They act as a bridge connecting ecological health with economic growth.
By analyzing these indicators in connection to GDP per capita, researchers can identify patterns and correlations that reveal how economic growth impacts environmental conditions.
This relationship is often complex, as seen in the given data, where arsenic initially increases with income but then decreases, hinting at an upward trend in environmental quality at higher income levels.
Linking GDP per capita Income to Environmental Health
GDP per capita income is a metric that gives an average economic output per person in a given area. It is often used to represent the economic prosperity of a nation. In this specific study, GDP per capita is linked to environmental indicators to examine if economic growth correlates with environmental quality.
A key observation from the data is that arsenic levels in rivers vary with changes in GDP per capita. Initially, as GDP per capita increases, arsenic levels also show a slight increase, suggesting potential initial environmental degradation.
However, beyond a certain point, the arsenic levels drop, implying that higher GDP per capita might be conducive to better environmental practices, perhaps because of increased resources for pollution control.
  • The study highlights the dual nature of economic growth: potential initial harm to the environment followed by improvement as income rises significantly.
  • This pattern can inform policy, emphasizing the need for careful environmental management in earlier stages of economic growth.
Understanding this relationship can aid in crafting policies that balance economic goals with environmental sustainability.
Exploring the Correlation Coefficient
The correlation coefficient, denoted as \( r \), is a statistical measure that describes the strength and direction of a relationship between two variables. In the context of cubic regression, it helps quantify how closely the fitted cubic model represents the actual data points.
For the given data set, the correlation coefficient is \(-0.95\). This value indicates a strong negative correlation between GDP per capita income (\( x \)) and arsenic levels (\( y \)) in rivers.
  • A strong negative correlation suggests that as GDP per capita increases, arsenic levels decrease overall.
  • The value of \( r \) closer to -1 means the fitted cubic regression model accurately represents the data direction and trend.
The negative \( r \) value aligns with the observation that after an initial increase, arsenic levels reduce as income continues to grow.
Understanding the correlation coefficient in such contexts helps reinforce the conclusion that economic growth, beyond a certain point, correlates with improved environmental safety and practices. This analytical insight can be instrumental for policymakers in designing strategies to optimize both economic and environmental outcomes.

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Most popular questions from this chapter

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