For given problem, give a point prediction and a 99% prediction interval for wealth growth when the income quartile is 5.
Problem
An article in the Journal of Monetary Economics assesses the relationship between percentage growth in wealth over a decade and a half of savings for baby boomers of age 40 to 55 with these people's income quartiles. The article presents a table showing five income quartiles, and for each quartile there is a reported percentage growth in wealth. The data are as follows.
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Income quartile:
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1
|
2
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3
|
4
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5
|
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Wealth growth (%):
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17.3
|
23.6
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40.2
|
45.8
|
56.8
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Run a simple linear regression of these five pairs of numbers and estimate a linear relationship between income and percentage growth in wealth.