What percentage of the variation in percent growth in wealth is explained by the regression in given problem?
Problem
An article in the Journal of Monetary Economics assesses the relationship between percentage growth in wealth over a decade and a half of savings for baby boomers of age 40 to 55 with these people's income quartiles. The article presents a table showing five income quartiles, and for each quartile there is a reported percentage growth in wealth. The data are as follows.
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Income quartile:
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1
|
2
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3
|
4
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5
|
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Wealth growth (%):
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17.3
|
23.6
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40.2
|
45.8
|
56.8
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Run a simple linear regression of these five pairs of numbers and estimate a linear relationship between income and percentage growth in wealth.