Question

8. It is a common belief that parents will spend more on the undergraduate college education of an eldest child than on the younger children. We survey investment in college for the two eldest children in 58 families with at least three children, all currently over 30 years old, where both children started college. We find that an average investment of $62,853 in the eldest, and $51,629 in the second, with a standard deviation of the difference of $15,116. Give a 99.5% confidence interval for the difference in mean investment.

Answer 1

Ans:

Paired t interval:

n=58

df=58-1=57

critical t value=tinv(0.005,57)=2.920

Point estimate for mean difference=62853-51629=11224

99.5% confidence interval for mean difference

=11224+/-2.920*(15116/sqrt(58))

=11224+/-5795.70

=(5428.3, 17019.7)