Question

Reporting margins of error. A U.S. News &
World Report article of July 17, 2014, reported Commerce Department estimates of changes in the
construction industry:

Construction fell 9.3 percent last month to a
seasonally adjusted annual rate of 893,000 homes,
the Commerce Department said Thursday.

If we turn to the original Commerce Department report (released on July 17, 2014), we read:
Privately-owned housing starts in June were at a
seasonally adjusted annual rate of 893,000. This
is 9.3 percent (10.3%) below the revised May
estimate of 985,000.

(a) The 10.3% figure is the margin of error based on a
90% level of confidence. Given that fact, what is the 90% confidence interval for the percent change in housing starts from May to June?

(b) Explain why a credible media report should state:
“The Commerce Department has no evidence that
privately-owned housing starts rose or fell in June from the previous month.”

Answer 1