There is an increased interest among policy-makers on the topic of providing free daycare and preschool for all children under age 5 in the United States.
economics
Description
Question 1
There is an increased interest among policy-makers on the topic of providing free daycare and preschool for all children under age 5 in the United States. Currently, most parents must pay a large cost to send kids to daycare or preschool. Policymakers are curious how big a benefit providing daycare and preschool would be to the long-term wellbeing of the economy. You have some data you could use to attempt to explore this question. Specifically, you have information on an individual’s annual income at age 40 in $1,000s (Y) and how many years they spent in daycare and preschool before age 5 (X). This data comes from a group of 10,000 randomly selected employed 40 year old adults in 2015.
(i) In the data you find that the correlation coefficient between X and Y is .75. What does this
mean about the relationship between X and Y? For this question talk about X and Y in general
terms and do not use the word “correlated”.
(ii) What does the correlation coefficient of .75 between X and Y mean when thinking about the
actual data (i.e. discuss the correlation in terms of adult income and daycare/preschool
education in a way your less math-oriented friends would understand)?
(iii) Give and explain one example of why that X, Y relationship might exist?
(iv) Assuming the example you gave above is correct. Would you encourage policymakers to
offer free daycare/preschool to improve the long-term future of the economy? Why or why
not? From your example, are there any alternative polices that might work equally well or
better?
(v) Is there an alternative explanation for why the X, Y relationship described in (ii) might exist
other than the one you gave in (iii), which would also change your answer to (iv)? Provide and
explain the new example and then answer the same question as in (iv) for the new example.
