Analysis of Association between Annual Income and Online Cosmetic Expenditure

STATISTICS
ASSIGNMENT
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Executive Summary
The given data has been collected using a survey and focuses on three main variables namely
gender, annual income of respondent and online cosmetic expenditure in the last 12 months. The
aim of the given study is to find out if there exists an association between the annual income and
the amount that is spent on cosmetics online. Additionally, the study also aims to test the
hypothesis whether the gender and online cosmetic expenditure are inter-related or not. In order
to analyse the same, the requisite descriptive and inferential statistical techniques have been
applied on the sample data. The association analysis involves the use of correlation and
regression analysis. On the other hand, the chi square test has been used for testing the
hypothesis regarding gender and online cosmetic spending. The results suggest that gender and
online cosmetic spending do not show any significant relationship which suggests that no gender
specific differences are observed. Also, it has been found that annual income has an impact on
the online cosmetic expenditure but the association relationship can be improved through the
addition of other prediction variables.
Research Study Description
The given research study to analyse the online spending on cosmetics by consumers in US. This
research study comes in the backdrop of rising online sales in the US. The appropriate data has
been collected through primary survey of 40 individuals across the two genders. A descriptive
research design has been used for the study whereby the focus is on testing specific hypothesis
using quantitative data that has been obtained through survey. Suitable descriptive and inferential
statistical tools would be used to analyse the given data in order to derive meaningful
conclusions. The findings and conclusion have been presented in the form of a separate section
dedicated to the same.
Hypothesis
The sample data collected would be used to test the following two hypotheses.
 Is there any significant relationship between the annual income earned by individuals and
the online spending on cosmetic?
 Does the online spending on cosmetic by an individual depend on the gender?
Variables of Interest
There are three variables which are present in the given dataset and are explained below.
1) Gender – The gender of the respondents can be male or female. Male has been denoted
with the alphabet M while Female has been denoted with the alphabet F. The data
measurement has been done using a nominal scale.
2) Annual income- This denotes the annual income of the respondents. The scale of
measurement for the given variable is interval.
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3) Online shopping cosmetic expenditure – This refers to the amount of money that the
respondent has spent in the last one year on online shopping on cosmetics.
Descriptive Data Analysis
The objective of the descriptive statistics is to represent a representation of the given data so that
the features of the sample population can be identified. The descriptive statistics (numerical
summary) for the selected variables are highlighted below:
 Gender
The pivot table in this case is the representation of the number of female and male head in the
sample.
Based on the above table, it is apparent that the count for the two genders is approximately the
same which augers well for the study and the underlying objectives in relation to hypothesis
testing.
 Annual Income
The measure of central tendency and dispersion measures for the variable annual income (AUD)
of female and male head is shown below:
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Based on the above descriptive statistics, it is apparent that the average annual income of the
sample is $ 65,261.95. Also, it is noteworthy that only negligible negative skew is present which
implies that the mean does not seem to be distorted by outliers on either side. The median
income level is $ 67, 200 which implies that for the given sample, 20 sample respondents had
annual income equal to or lower than $ 67,200. It is noteworthy that the probability distribution
of the given variable can be approximated as normal distribution considering the shape of the
distribution seems symmetric. Further, the dispersion in the data captured through the standard
deviation and range seem to be on the higher side considering the mean (Eriksson & Kovalainen,
2015).
 Online cosmetic shopping expenditure
The measure of central tendency and dispersion measures for the variable online cosmetic
shopping expenditure (AUD) of female and male head are shown below:
Based on the above descriptive statistics, it is apparent that the average annual online cosmetic
expenditure of the sample is $ 5,580.20. Also, it is noteworthy that positive skew is present
which implies that the mean seems to be partially distorted by outliers on positive side. The
median annual online cosmetic expenditure is $ 5,950 which implies that for the given sample,
20 sample respondents had annual online cosmetic expenditure equal to or lower than $ 67,200.
It is noteworthy that the probability distribution of the given variable cannot be approximated as
normal distribution considering the shape of the distribution seems slightly asymmetric. Further,
the dispersion in the data captured through the standard deviation and range seem to be on the
higher side considering the mean (Flick, 2015).
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