Economists Caution That Conventional Statistics Used to Estimate the Extent

question 7

Multiple Choice

Economists caution that conventional statistics used to estimate the extent of poverty in the United States fail to account for benefits people receive that, if considered, would reduce the amount of poverty. Which of the following is an example of these benefits?

• A) Individuals can use tax credits and the personal exemption to reduce their taxable incomes. This reduces what they owe the government and increases their disposable incomes.
• B) The federal income tax system is progressive. As a result, the poor have higher after-tax incomes than they would have if the income tax system was proportional or progressive.
• C) Individuals with low incomes receive non-cash benefits such as free school lunches and food stamps.
• D) The federal minimum wage forces employers to pay workers with low skills an efficiency wage.

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Definitions:

Cohen's D

A measure of the standardized difference between two means, commonly used in the context of effect size in statistics.

Effect Size

A quantitative measure of the magnitude of the difference between groups or the size of a relationship between variables.

Analysis of Variance

Analysis of variance (ANOVA) is a statistical method used to compare the means of three or more groups to determine if there are significant differences between them.

Test Statistic

A value calculated from sample data during a hypothesis test, used to make a decision about the relationship between variables or the acceptance of a hypothesis.