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Chapter 1: Q22. (page 50)

The 鈥渓ucky store effect鈥� in lottery ticket sales. In the American Economic Review (Vol. 98, 2008), University of Chicago researchers investigated the lucky store effect theory in lottery ticket sales, i.e., the theory that a lottery retail store that sold a large-prize-winning ticket will experience greater ticket sales the following week. The researchers examined the weekly ticket sales of all 24,400 active lottery retailers in Texas. The analysis showed that 鈥渢he week following the sale of [a winning Lotto Texas ticket], the winning store experiences a 12 to 38 percent relative sales increase. . . . 鈥� Consequently, the researchers project that future winning lottery retail stores will experience the lucky store effect. Is this study an example of descriptive statistics or inferential statistics? Explain.

Short Answer

Expert verified

The study done by the researchers is an example of inferential statistics as it is utilizing sample data in order to make projections about the weekly ticket sales.

Step by step solution

01

Explaining lottery tickets

Lottery tickets are often bought by small investors with the hope of getting a huge prize. In some cases, the government put a ban on this as a lottery game is regarded as a form of gambling but many organizations still organize lottery games.

02

Reason behind the study on weekly ticket sales being inferential

In this study, the University of Chicago researchers are predicting whether the sales experienced by a retail store have increased or not with an increase in the sales of lottery tickets. After finding an increase in the sales by around 12 to 38 percent, the researchers predicted the future sales and so it is inferential.If the researchers had not predicted anything, the study would have been regarded as descriptive.

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Most popular questions from this chapter

Zillow.com estimates of home values. Zillow.com is a real estate Web site that provides free estimates of the market value of homes. A trio of University of Texas at San Antonio professors compared Zillow estimates to actual sale prices of homes and published their results in The Appraisal Journal (Winter 2010). The analysis was based on data collected for 2,045 single-family residential properties in Arlington, Texas, that sold during the last 6 months of 2006. Sale price and Zillow estimated value (in dollars) were measured for each property. Zillow claims that this market has one of its highest-accuracy ratings. However, the research revealed that Zillow overestimated the market value by more than 10% for nearly half of the properties.

a. What is the experimental unit for this study?

b. Describe the variables measured in the study. Do these variables produce quantitative or qualitative data?

c. Give a scenario where the 2,045 properties represent a population.

d. If the 2,045 properties represent a representative sample from a population, describe the population.

e. Suppose the relevant population is all single-family residential properties in the United States. Do you believe the 2,045 properties are representative of this population? Explain.

Explain the difference between descriptive and inferential statistics.

Can money spent on gifts buy love? Is the gift you purchased for that special someone really appreciated? This was the question of interest to business professors at Stanford University. Their research was published in the Journal of Experimental Social Psychology (Vol. 45, 2009). In one study, the researchers investigated the link between engagement ring price (dollars) and level of appreciation of the recipient (measured on a 7-point scale where 1 = 鈥渘ot at all鈥� and 7 = 鈥渢o a great extent鈥�). Participants for the study were those who used a popular Web site for engaged couples. The Web site鈥檚 directory was searched for those with 鈥渁verage鈥� American names (e.g., 鈥淛ohn Smith,鈥� 鈥淪ara Jones鈥�). These individuals were then invited to participate in an online survey in exchange for a $10 gift certificate. Of the respondents, those who paid really high or really low prices for the ring were excluded, leaving a sample size of 33 respondents.

a. Identify the experimental units for this study.

b. What are the variables of interest? Are they quantitative or qualitative in nature?

c. Describe the population of interest.

d. Do you believe the sample of 33 respondents is representative of the population? Explain.

e. In a second designed study, the researchers investigated whether the link between gift price and level of appreciation is stronger for birthday gift-givers than for birthday gift-receivers. The participants were randomly assigned to play the role of gift-giver or gift-receiver. Assume that the sample consists of 50 individuals. Use a random number generator to randomly assign 25 individuals to play the gift-receiver role and 25 to play the gift-giver role.

What is statistics?

Monitoring the production of soft-drink cans. The Wakefield plant of Coca-Cola and Schweppes Beverages Limited (CCSB) can produce 4,000 cans of soft drink per minute. The automated process consists of measuring and dispensing the raw ingredients into storage vessels to create the syrup and then injecting the syrup, along with carbon dioxide, into the beverage cans. In order to monitor the sub process that adds carbon dioxide to the cans, five filled cans are pulled off the line every 15 minutes, and the amount of carbon dioxide in each of these five cans is measured to determine whether the amounts are within prescribed limits.

a. Describe the process studied.

b. Describe the variable of interest.

c. Describe the sample.

d. Describe the inference of interest.

e. Brix is a unit for measuring sugar concentration. If a technician is assigned the task of estimating the average brix level of all 240,000 cans of beverage stored in a warehouse near Wakefield, will the technician be examining a process or a population? Explain.
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