Example of Product moment correlation

The given data was acquired during a social survey conducted in a described urban area regarding the yearly income of described families and the corresponding expenditures.

Required

Compute the product moment correlation coefficient briefly comment on the value acquired

The produce moment correlation:

Workings:

x¯  = 4020/10 = 402                 

y¯ = 3550/10 = 355

= 0.89

Comment: The value acquired 0.89 suggests that the correlation between annual expenditure and annual income is high and positive. This shows that the more one earns the more one spends.