Is FEMA linked to crime? In their paper “Weathering Corruption” ( The Journal of

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Is FEMA linked to crime? In their paper “Weathering Corruption” (The Journal of Law and Economics 51, November 2008), authors Leeson and Sobel argue that giving states FEMA dollars results in corruption, and that “eliminating FEMA disaster relief would reduce corruption more than 20 percent in the average state.” Data have been compiled to analyze their claim: for each state and the District of Columbia, data were collected for The data are presented in the attached table. Assume for simplicity that number of federal employees per state stayed constant from 2006 to 2015. For each state, calculate the “observed rate of public corruption per 1000 federal employees”. Then, answer the following questions:

Treat each state’s 10-year average conviction rate as a single number, and divide the data into two groups: the group of states that received less than $75M from FEMA (25 states plus DC), and the group of states that received more than $75M from FEMA (25 states). Assume that each group is equivalent to a simple random sample from some population of states.

10-year average conviction rate of the states that received more than 75 M: 0.73594, SD: 0.392396

10-year average conviction rate of the states that received less than 75 M: 0.42136, SD:0.262304

What is/are valid conclusion(s) to draw from these data?

A. If the 25 states that received more than $75M from FEMA had not received money from FEMA, their average conviction rate due to corruption would have been about 0.42 / 0.74 = 57% of its current rate.

B. The population of states that received more than $75M from FEMA had a higher average rate of conviction due to corruption than the population of states that received less than $75M from FEMA.

C. The population of states that received more than $75M from FEMA might have the same average rate of conviction due to corruption as the population of states that received less than $75M from FEMA.

D. If the 25 states plus DC that received less than $75M from FEMA had been given more than $75M from FEMA, their expected conviction rate due to corruption would be 0.74 or so.

E. A, B, and D are correct.

Explanation / Answer

option B) is correct

The population of states that received more than $75M from FEMA had a higher average rate of conviction due to corruption than the population of states that received less than $75M from FEMA.

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