UNSW School of Economics

ECON1203 Business and Economic Statistics

TERM 3, 2020

CASE STUDY (MILESTONE 1)

“The Marriage Premium”

Purpose
The idea of this assessment task is to simulate a scientific study involving formulating a
testable hypothesis about a population of interest, working with real data and implementing
a full-scale statistical analysis with the aim to provide reliable inference. It is designed to help
you learn about what is involved in undertaking basic statistical analysis to understand a real-
world problem and, communicating the results of this analysis to business/government
stakeholders.

The fun economic fact behind the title

Economists have been documenting the marriage premium - the income boost (anywhere
from 10 to 40 percent) married men have over their unmarried counterparts - for decades.
But researchers have historically gotten stuck when it comes to providing explanations for the
phenomenon: Do married men perform better because their wives are doing more of the
housework? Do married men perform better because women tend to marry high performers
anyway? Do married men perform about the same, but employers discriminate in their favor
because they come across as reliable? Without data about productivity, it's hard to say.

Researchers working in this particular area often tun to sports for answers. The reason being
that, sports in general and basketball in particular are filled with statistics and data. The
statistics collected about the players and their performances in games provide detail
information that enable controlling for many unobserved confounding factors. Such factors
like productivity, which are not observable in the wider population of men in other jobs, allow
researchers to measure without bias what determines the salaries of players and whether
specific characteristics of the players earn them a premium. More on this in Milestone 3!

Context and Problem

You are working for Equal Rights Australia (“EqRA”), a not-for-profit organization that
specializes in providing consultancy services and workplace solutions that reduce
discrimination in service delivery and decision-making. As part of its annual report to its Board
members, EqRA has commissioned a study into workplace discrimination. EqRA chief
Economist cautioned “Labor economists have long noted that married men earn substantially
more per hour than men who are not currently married.” He added that ‘marriage premium’
is of particular interest for analyzing gender-based discrimination and achieving a better
understanding of the determination of individual wages.

You met with EqRA senior consultant, Rachel Ng, to address the chief economist’s concerns.
Dr. Ng did some extensive research and was able to get a unique data set that would
provide convincing statistical evidence to whether there exists some basis to the observed
marital-wage discrimination. The data collected consists of a cross sectional sample of
professional basketball players, more specifically players from the NBA, the National
Basketball Association league.

As a statistical consultant, you are given the responsibility to investigate the relationship
between wages, marriage and productivity using the data that Dr. Ng has sent you in an Excel
file.

The first objective which is the concern of Milestone 1, is to understand the characteristics of
the NBA players such as:

a) The profile of the players (e.g. age, marital status, race, experience)
b) The distribution of productivity with respect to the players’ demographics and marital
status
c) Whether there are interactions between players’ characteristics such as Race and marital
status.
d) Measuring players’ productivity is a difficult task. In addition to the simple measures
provided in the data that measure scoring (point per minute), toughness (rebounds per
minute) and quickness (assists per minute), the chief economist suggested to use a
productivity index, also called NBA Efficiency defined as:
Prod_Index = points + rebounds + assist

Data
You are assigned personalized data set. Each individual data set refers to the problem above
and has the same structure. However, values of the variables will vary across students,
meaning that statistical results and any inferences drawn from them may differ across
students.
Since this is a team project, please download only one set of data using any one of your zIDs.

Instructions for downloading your team data

Link: https://econ1203.teaching.unsw.edu.au/
Please use this link above to access directly your dataset. Click on the link. Click on the tab
'Project Data'. You will be asked to enter your zID number (without the z and not 1234567!).
Press enter. Then click on 'Load Project Data'. The data now is loaded, you must then
download the file to your computer by clicking 'Download Data.'
Each data set is a sample of 100 observations, where each observation is randomly sampled
from the population of NBA players.

There are 19 variables that can be divided into three categories, marital status and wage,
productivity related measures and demographics. The variables are as follows:

Variable Description

Marr =1 if the player is married

Wage Annual salary, thousands $
Exper Years as professional player
 Age Player’s age in years
College Years played in college
Games Average number of games per year
Minutes Minutes per season
Guard =1 if player is in guard position
Forward =1 if player is in forward position
Center =1 if player in center position
Points Number of points per game
Rebounds Number of rebounds per game
Assists Number of assists per game
Allstar =1 if player is ever all star
Avgmin Minutes per game
Lwage Ln(wage) natural logarithm of wage
Black =1 if player is of black race
Children =1 if player has children
Weight Player’s weight in lbs. (pounds)

Milestone 1 Report

Remember that the purpose of this exercise is to transform the data into useful information
to understand the wage distribution for male population. The above is a suggestion of things
for you to explore in trying to understand the labour market and whether there is evidenc e
of discrimination along any of the characteristics of the market participants (here male
employees). The premise is that we can use the labour market for NBA players as ‘a
controlled’ market to make inference about the full population. Please extend your analysis
to include other relevant observations. Credit will be given to creative/in-depth ideas and
analysis.

Please write a short report on the key features of the players and their productivity using
the descriptive statistics that you have learned. It is natural to associate different parts of
the project work with the coverage of relevant material in particular sections of the
lectures/textbook. However, remember you are writing a professional report, not providing
a sequence of answers to an assignment problems, so you should try to write a flowing
report organized around ideas, not methods.

The objective is to have a preliminary understanding of the data and what it can tell us
about the question we like to investigate. Descriptive statistics give a summary of the data
and it is your job to put together these key points and make sense of the information.

You can see from the marking rubric below that while your project mark will be based
primarily on the substance of your statistical work, the presentation of the material will also
be considered. Reports should be typed and should use appropriate graphical techniques to
represent the data, as well as other appropriate statistical analysis
As is the case in any actual work environment, there is no “one right way” to construct a
report like this, and hence there is no rigid template for what your Milestone report should
look like, nor is there only one way to approach the analysis.

Administrative Details

Length: Total length (not including tables, graphs and references) should not
exceed 1500 words and a total of 10 pages. Please use 12pts fonts.
Your mark will be based on the first 1500 words, the rest will NOT be
marked!

As a style guide, you may put some or all the tables/graphs as an

appendix and refer to them in your report as necessary. Include only
graphics/tables to substantiate your analysis/conclusions and findings.
In the process of preparing your work, you will go through many tables
and graphs, which are most probably not relevant for Dr. Ng to see. So
be very selective and make good use of the pages limit!

Milestone mark: The milestone is marked out of a total score of 20 marks. The
milestone score is weighted 7.5%. A peer review task associated to
milestone is weighted 2.5%. Both will constitute 10% of your total
course mark.
Due date: You must submit only one electronic copy per team to the course
Moodle site by 11:59pm on the 09/10/2019 (Friday, Week 4). Note that
each team has to submit a (signed) Team Project Charter.
Late submission: 20% of the value of the project will be deducted for every day or part
thereof that the hard copy is turned in after the deadline (including the
weekend). Projects submitted more than five days late will not be
marked and will be assigned a mark of zero. You and your teammates
should be working on the material regularly before the due date.
Extensions will only be granted in exceptional circumstances and must
be approved by the lecturer-in-charge. For more details about late
submission, see the Course Outline.
Plagiarism: Evidence of plagiarism will be treated extremely seriously: automatic
and immediate failure in the course is a possible penalty. See Part B of
the course outline for further details about UNSW’s policies on
plagiarism. If you are in doubt about how to identify or avoid
plagiarism, follow the link to and complete the self-paced Working
with Academic Integrity module on Moodle.
Coverage: To complete the tasks of Milestone 1, you are only expected to use the
statistical techniques developed in the lectures up until and including
WEEK 2.