A famous articled entitled "An Economic Theory of Suicide," published in the Journal of Political Economy in 1974, posited that "when unemployment rises, individuals' expectation of future incomes (and utilities) are revised downward. Holding real income of the employed constant, an increased number of people will believe future prospects to have diminished and will commit suicide." This problem will test this argument using data taken from the United States in the years 1968 to 1978, available on the course website in the suicides file. The data include the number of suicides per 100,000 people (suicides), as well as the national unemployment rate (unemployment) in any given year.
A) Generate a small table showing the range (i.e., the minimum value and the maximum value) for each of the three variables in these data (year, suicides, and unemployment).
B) Run a regression of suicides (dependent variable) on unemployment (independent variable). Present a scatter plot of the data with unemployment on the X-axis and the suicide rate on the Y-axis. Overlay onto the plot the regression line you calculated. Explain what the regression line means for the relationship between unemployment and the suicide rate. Please be specific in your explanation (i.e., again, an explanation along the lines of "as one goes up, the other one goes up" is insufficient).
C) During the recent economic crisis and recovery, the unemployment rate peaked at 10% (in November 2009). Based on your regression, what suicide rate would you expect for November 2009? In your opinion, is this a reasonable estimate? Why or why not?