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Chapter 2: Problem 85

A mortgage lender routinely places advertisements in a local newspaper. The advertisements are of three different types: one focusing on low interest rates, one featuring low fees for first-time buyers, and one appealing to people who may want to refinance their homes. The lender would like to determine which advertisement format is most successful in attracting customers to call for more information. Describe an experiment that would provide the information needed to make this determination. Be sure to consider extraneous variables, such as the day of the week that the advertisement appears in the paper, the section of the paper in which the advertisement appears, or daily fluctuations in the interest rate. What role does random assignment play in your design?

Short Answer

Expert verified
Conduct an experiment where all three advertisement types are run in different sections of the paper on different days of the week for several weeks. Using random assignment to distribute the variables, record the viewer response to each ad. The ad with the highest response, after taking into consideration all controlled variables, is the most effective.

Step by step solution

01

Identify the Variables

The independent variable in this case is the type of advertisement (low interest rates, low fees for first-time buyers or refinancing options). The dependent variable is the call rate or response from potential customers.
02

Control for Extraneous Variables and Create the Experimental Design

The experiment should be conducted over a period of time, e.g., several weeks. Each week, all three types of advertisements should be run on different days to account for any effects of the day of the week. Ads should also be rotated through different sections of the paper to avoid bias. Changes in the interest rate could be recorded and taken into consideration when tallying the results.
03

Implement Random Assignment

Random assignment will play an essential role in evenly distributing the days, advertisement types, and paper sections among the variables. This step is vital to ensure the validity of the experiment and prevent any biases from affecting the results.
04

Measure the Outcomes

The call rate for each ad and the day it was run should be recorded. Collecting data over a period of time will give a more reliable indication of which ad is most effective.
05

Analyze the Data

Analyze the call data in correlation with the type of advertisement, day of the week it was run, and the section of the paper it appeared on. Given this analysis, the advertisement with the highest viewer response can be identified, taking all controlled variables into account.

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Key Concepts

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

Independent Variable
When designing an experiment, the independent variable is the factor you intentionally change to observe its effect. In the given exercise, the independent variable is the type of advertisement being tested. Each advertisement emphasizes a different selling point: low interest rates, low fees for first-time buyers, or refinancing options. These variations allow the mortgage lender to explore which advertisement resonates best with potential customers.
Adjusting the independent variable should be done systematically and distinctly to ensure clarity in the experiment's outcomes. By focusing on the independent variable, researchers can better understand what changes might lead to increased customer inquiries.
Dependent Variable
The dependent variable is what you measure in the experiment and is affected by the independent variable. In this case, the dependent variable is the call rate鈥攔epresenting the number of responses or inquiries received from potential customers about the mortgage offers.
The call rate is crucial because it directly indicates the effectiveness of each advertisement. By analyzing how different advertisements influence customer response rates, the mortgage lender can identify the most compelling message. Ultimately, the aim is to select the advertisement that successfully prompts customers to reach out for additional information, thus reflecting the advert's impact on potential buyers.
Random Assignment
Random assignment is a fundamental part of experimental design that helps ensure unbiased results. By randomly assigning the different advertisement types to specific days and newspaper sections, the experimenter minimizes the influence of confounding factors.
For example, certain days of the week might have higher readership, and some newspaper sections might attract more attention.
  • Randomly rotating advertisement placements helps level out these potential biases.
  • Ensures that each advertisement has an equal chance of being seen under various conditions.
This approach aids in creating a fair comparison among the ads, allowing the researcher to attribute differences in call rates directly to the advertisement's design, rather than external influences.
Extraneous Variables
Extraneous variables are those factors that could inadvertently influence the outcome of an experiment but are not the focus of the study. In the mortgage lender's experiment, extraneous variables might include:
  • The day of the week the ad is placed.
  • The section of the newspaper where the ad appears.
  • Fluctuations in daily interest rates.
To ensure these variables do not skew the results, the experiment must control them.
One way to manage these variables is by spreading ad placements across different days and newspaper sections. Tracking and adjusting for market changes, such as shifts in interest rates, is also essential. Managing extraneous variables effectively ensures the observed outcomes are due to the changes in the independent variable鈥� the type of advertisement鈥� allowing the experimenter to draw clearer conclusions from the data.

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Most popular questions from this chapter

A manufacturer of clay roofing tiles would like to investigate the effect of clay type on the proportion of tiles that crack in the kiln during firing. Two different types of clay are to be considered. One hundred tiles can be placed in the kiln at any one time. Firing temperature varies slightly at different locations in the kiln, and firing temperature may also affect cracking. Discuss the design of an experiment to collect information that could be used to decide between the two clay types. How does your proposed design deal with the extraneous variable temperature?

Asthma is a chronic lung condition characterized by difficulty in breathing. Some studies have suggested that asthma may be related to childhood exposure to some animals, especially dogs and cats, during the first year of life (鈥淓xposure to Dogs and Cats in the First Year of Life and Risk of Allergic Sensitization at 6 to 7 Years of Age," Journal of the American Medical Association [2002]: 963-972). Some environmental factors that trigger an asthmatic response are (1) cold air, (2) dust, (3) strong fumes, and (4) inhaled irritants. a. Write a set of questions that could be used in a survey to be given to parents of young children suffering from asthma. The survey should include questions about the presence of pets in the first year of the child's life as well as questions about the presence of pets today. Also, the survey should include questions that address the four mentioned household environmental factors. b. It is generally thought that low-income persons, who tend to be less well educated, have homes in environments where the four environmental factors are present. Mindful of the importance of comprehension, can you improve the questions in Part (a) by making your vocabulary simpler or by changing the wording of the questions? c. One problem with the pet-related questions is the reliance on memory. That is, parents may not actually remember when they got their pets. How might you check the parents' memories about these pets?

Does living in the South cause high blood pressure? Data from a group of 6278 whites and blacks questioned in the Third National Health and Nutritional Examination Survey between 1988 and 1994 (see CNN.com web site article of January 6,2000 , titled "High Blood Pressure Greater Risk in U.S. South, Study Says") indicates that a greater percentage of Southerners have high blood pressure than do people in any other region of the United States. This difference in rate of high blood pressure was found in every ethnic group, gender, and age category studied. List at least two possible reasons we cannot conclude that living in the South causes high blood pressure.

The Pew Research Center conducted a study of gender bias. The report "Men or Women: Who is the Better Leader? A Paradox in Public Attitudes" (www. pewsocialtrends.org, August 28,2008 ) describes how the study was conducted: In the experiment, two separate random samples of more than 1000 registered voters were asked to read a profile sent to them online of a hypothetical candidate for U.S. Congress in their district. One random sample of 1161 respondents read a profile of Ann Clark, described as a lawyer, a churchgoer, a member of the local Chamber of Commerce, an environmentalist and a member of the same party as the survey respondent. They were then asked what they liked and didn't like about her, whether they considered her qualified and whether they were inclined to vote for her. There was no indication that this was a survey about gender or gender bias. A second random sample of 1139 registered voters was asked to read a profile of Andrew Clark, who- except for his gender-was identical in every way to Ann Clark. These respondents were then asked the same questions. a. What are the two treatments in this experiment? b. What are the response variables in this experiment? c. Explain why "taking two separate random samples" has the same benefits as random assignment to the two treatments in this experiment.

A study of college students showed a temporary gain of up to 9 IQ points after listening to a Mozart piano sonata. This conclusion, dubbed the Mozart effect, has since been criticized by a number of researchers who have been unable to confirm the result in similar studies. Suppose that you wanted to see whether there is a Mozart effect for students at your school. a. Describe how you might design an experiment for this purpose. b. Does your experimental design include direct control of any extraneous variables? Explain. c. Does your experimental design use blocking? Explain why you did or did not include blocking in your design. d. What role does random assignment play in your design?
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