A Psychologist Has Performed the Following Experiment Can She Infer at the 5% Significance Level That There

question 39

Essay

A psychologist has performed the following experiment. For each of 10 sets of identical twins who were born 30 years ago, she recorded their annual incomes according to which twin was born first. The results (in $000) are shown below. $$\begin{array} { | c | c | c | } \hline \text { Twin set } & \text { First born } & \text { Second born } \\\hline 1 & 32 & 44 \\\hline 2 & 36 & 43 \\\hline 3 & 21 & 28 \\\hline 4 & 30 & 39 \\\hline 5 & 49 & 51 \\\hline 6 & 27 & 25 \\\hline 7 & 39 & 32 \\\hline 8 & 38 & 42 \\\hline 9 & 56 & 64 \\\hline 10 & 44 & 44 \\\hline\end{array}$$ Can she infer at the 5% significance level that there is a difference in income between the twins?

---

Definitions:

Pigouvian Tax

A tax imposed on any market activity that generates negative externalities, intended to correct the market outcome.

Sulfur Dioxide

A colorless gas with a sharp smell, produced by burning fossil fuels and volcanic eruptions, often associated with air pollution and acid rain.

Marginal Social Cost

The total cost to society of producing one additional unit of a good or service, including both the private costs and any external costs.

Pigouvian Taxes

Taxes designed to reduce external costs.