In one town monthly incomes for men with college degrees are

In one town, monthly incomes for men with college degrees are found to have a standard deviation of $650. Use a 0.01 significance level to test the claim that for men without college degrees in that town, incomes have a higher standard deviation. A random sample of 22 men without college degrees resulted in incomes with a standard deviation of $913.

Solution

Chi-square test static = (n-1)s^2 / (sigma^2)

=(22-1)(913/sqrt(22))^2/ (650)^2

= 39.55

Critical values: = 38.932.

Reject H0.

There is sufficient evidence to support the claim that incomes of men without college degrees have a standard deviation greater than $650./