Banking Data Median Median Years Median Median Median Household Average Bank Age

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Banking Data Median Median Years Median Median Median Household Average Bank Age Education Income Home Value Wealth Balance 35.9 14.8 $91,033 $183,104 $220,741 $38,517 37.7 13.8 $86,748 $163,843 $223,152 $40,618 36.8 13.8 $72,245 $142,732 $176,926 $35,206 35.3 13.2 $70,639 $145,024 $166,260 $33,434 35.3 13.2 $64,879 $135,951 $148,868 $28,162 34.8 13.7 $75,591 $155,334 $188,310 $36,708 39.3 14.4 $80,615 $181,265 $201,743 $38,766 36.6 13.9 $76,507 $149,880 $189,727 $34,811 35.7 16.1 $107,935 $276,139 $211,085 $41,032 40.5 15.1 $82,557 $182,088 $220,782 $41,742 37.9 14.2 $58,294 $123,500 $132,432 $29,950 43.1 15.8 $88,041 $194,369 $267,556 $51,107 37.7 12.9 $64,597 $119,305 $186,156 $34,936 36.0 13.1 $64,894 $141,011 $160,017 $32,387 40.4 16.1 $61,091 $194,928 $113,559 $32,150 33.8 13.6 $76,771 $159,531 $197,264 $37,996 36.4 13.5 $55,609 $123,085 $105,582 $24,672 37.7 12.8 $74,091 $143,750 $217,869 $37,603 36.2 12.9 $53,713 $112,649 $117,441 $26,785 39.1 12.7 $60,262 $126,928 $161,322 $32,576 39.4 16.1 $111,548 $230,893 $331,009 $56,569 36.1 12.8 $48,600 $105,737 $106,671 $26,144 35.3 12.7 $51,419 $104,149 $111,168 $24,558 37.5 12.8 $51,182 $106,898 $88,370 $23,584 34.4 12.8 $60,753 $95,869 $143,115 $26,773 33.7 13.8 $64,601 $103,737 $134,223 $27,877 40.4 13.2 $62,164 $114,257 $144,038 $28,507 38.9 12.7 $46,607 $94,576 $114,799 $27,096 34.3 12.7 $61,446 $122,619 $161,538 $28,018 38.7 12.8 $62,024 $134,430 $149,351 $31,283 33.4 12.6 $54,986 $105,647 $126,929 $24,671 35.0 12.7 $48,182 $114,436 $102,732 $25,280 38.1 12.7 $47,388 $92,820 $118,016 $24,890 34.9 12.5 $55,273 $102,468 $126,959 $26,114 36.1 12.9 $53,892 $92,968 $129,176 $27,570 32.7 12.6 $47,923 $104,539 $88,384 $20,826 37.1 12.5 $46,176 $92,654 $101,964 $23,858 23.5 13.6 $33,088 $105,430 $44,223 $20,834 38.0 13.6 $53,890 $108,446 $95,013 $26,542 33.6 12.7 $57,390 $111,836 $134,434 $27,396 41.7 13.0 $48,439 $100,788 $124,474 $31,054 36.6 14.1 $56,803 $149,138 $101,695 $29,198 34.9 12.4 $52,392 $93,875 $133,101 $24,650 36.7 12.8 $48,631 $95,490 $105,202 $23,610 38.4 12.5 $52,500 $105,377 $139,199 $29,706 34.8 12.5 $42,401 $106,478 $94,867 $21,572 33.6 12.7 $64,792 $116,071 $185,714 $32,677 37.0 14.1 $59,842 $106,949 $135,329 $29,347 34.4 12.7 $65,625 $129,688 $175,000 $29,127 37.2 12.5 $54,044 $108,654 $140,726 $27,753 35.7 12.6 $39,707 $89,552 $80,124 $21,345 37.8 12.9 $45,286 $108,431 $91,928 $28,174 35.6 12.8 $37,784 $92,712 $60,721 $19,125 35.7 12.4 $52,284 $92,143 $146,028 $29,763 34.3 12.4 $42,944 $86,192 $98,778 $22,275 39.8 13.4 $46,036 $99,508 $98,343 $27,005 36.2 12.3 $50,357 $90,750 $126,613 $24,076 35.1 12.3 $45,521 $82,720 $105,346 $23,293 35.6 16.1 $30,418 $139,739 $24,999 $16,854 40.7 12.7 $52,500 $94,792 $147,222 $28,867 33.5 12.5 $41,795 $94,456 $91,806 $21,556 37.5 12.5 $66,667 $78,906 $143,750 $31,758 37.6 12.9 $38,596 $95,364 $54,453 $17,939 39.1 12.6 $44,286 $93,103 $110,465 $22,579 33.1 12.2 $37,287 $75,561 $86,591 $19,343 36.4 12.9 $38,184 $80,099 $76,438 $21,534 37.3 12.5 $47,119 $88,958 $102,993 $22,357 38.7 13.6 $44,520 $96,112 $93,915 $25,276 36.9 12.7 $52,838 $101,705 $75,040 $23,077 32.7 12.3 $34,688 $82,870 $93,750 $20,082 36.1 12.4 $31,770 $74,525 $47,446 $15,912 39.5 12.8 $32,994 $89,223 $50,592 $21,145 36.5 12.3 $33,891 $72,739 $81,880 $18,340 32.9 12.4 $37,813 $86,667 $69,643 $19,196 29.9 12.3 $46,528 $88,889 $96,591 $21,798 32.1 12.3 $30,319 $67,083 $34,367 $13,677 36.1 13.3 $36,492 $172,768 $24,999 $20,572 35.9 12.4 $51,818 $80,357 $135,185 $26,242 32.7 12.2 $35,625 $64,737 $76,321 $17,077 37.2 12.6 $36,789 $86,563 $69,764 $20,020 38.8 12.3 $42,750 $77,717 $95,192 $25,385 37.5 13.0 $30,412 $138,911 $24,999 $20,463 36.4 12.5 $37,083 $70,909 $95,833 $21,670 42.4 12.6 $31,563 $81,597 $71,759 $15,961 19.5 16.1 $15,395 $67,500 $24,999 $5,956 30.5 12.8 $21,433 $83,456 $24,999 $11,380 33.2 12.3 $31,250 $91,049 $52,976 $18,959 36.7 12.5 $31,344 $77,541 $36,510 $16,100 32.4 12.6 $29,733 $60,252 $27,531 $14,620 36.5 12.4 $41,607 $76,270 $98,455 $22,340 33.9 12.1 $32,813 $40,313 $79,167 $26,405 29.6 12.1 $29,375 $52,096 $24,999 $13,693 37.5 11.1 $34,896 $65,357 $81,818 $20,586 34.0 12.6 $20,578 $113,239 $24,999 $14,095 28.7 12.1 $32,574 $50,244 $49,662 $14,393 36.1 12.2 $30,589 $69,375 $48,890 $16,352 30.6 12.3 $26,565 $64,038 $42,543 $17,410 22.8 12.3 $16,590 $67,850 $24,999 $10,436 30.3 12.2 $9,354 $91,708 $24,999 $9,904 22.0 12.0 $14,115 $53,923 $24,999 $9,071 30.8 11.9 $17,992 $46,885 $24,999 $10,679 35.1 11.0 $7,741 $99,375 $24,999 $6,207 The sample data below shows the first six banking data of the Excel file Banking Data, which provides data acquired from banking and census records for different zip codes in the bank's current market. Such information can be useful in targeting advertising or new customers or for choosing locations for branch offices. The data show the median age of the population, median years of education, median income, median home value, median household wealth, and average bank balance If you run regression including all independent variables to predict the average bank balance of a customer, you will see that almost 94.7% of the variation in the average bank balance is explained by all five independent variables together, you can see that at a 0.05 level of significance, the p-values indicate that both Education, and Home Value do not appear to be significant. A good regression model should include only significant independent variables. However, it is not always clear exactly what will happen when add or remove variables from a model; variables that are (or are not) significant in one model may (or may not) be significant in another. Therefore, we should not consider dropping all insignificant variables at one time (do not do it), but rather take a more structured approach. This suggestsa systematic approach to building good regression models: 1. Construct a model with all available independent variables. Check for significance of the independent variables by examining the p-values. Identify the independent variable having the largest p-value that exceeds the chosen 0.05 level of significance Remove the variable identified in step 2 from the model and check for significance of the independent variables again. (Do not remove all variables with p-values that exceed at the same time, but remove only one at a time.) Continue until all variables are significant, that is, until you find the best regression model. 2. 3. 4. For this assignment, follow the 4 steps to build a good regression model and use statistical thinking ideas to draw short but concise conclusions of your findings. Banking Data Median Median Years Median Household Average Bank Median Median Home Value Age Education Income Wealth Balance 35.9 37.7 36.8 35.3 35.3 34.8 14.8 13.8 13.8 13.2 13.2 13.7 S91,033 $183,104 S86,748 $163,843 S72,245 $142,732 S70,639 $145,024 S64,879 $135,951 S75,591 $155,334 220,741 S223,152 S176,926 S166,260 S148,868 S188,310 S38,517 S40,618 S35,206 S33,434 S28,162 S36,708

Explanation / Answer

(1)

Balance=-10710.6428+311.6649*age+621.8603*Education+0.1463*Income+0.0092*HomeValue+0.0743*Wealth

(2) largest p-value is of the variable Home value

(3)after removing the Home value the analysis is given as

here all the variable having p-value less than alpha=0.05

Regression Statistics Multiple R 0.97309221 R Square 0.946908448 Adjusted R Square 0.944143263 Standard Error 2055.64333 Observations 102 ANOVA df SS MS F Significance F Regression 5 7235179873 1447035975 342.4395 1.5184E-59 Residual 96 405664271.9 4225669.5 Total 101 7640844145 Coefficients Standard Error t Stat P-value Intercept -10710.64278 4260.976308 -2.51365931 0.013613 Age 318.6649626 60.98611242 5.22520538 1.01E-06 Education 621.8603472 318.9595184 1.94965289 0.054135 Income 0.146323453 0.040781001 3.58802994 0.000527 Home Value 0.009183067 0.011038075 0.83194464 0.407505 Wealth 0.074331533 0.011189265 6.64311113 1.85E-09

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