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Hypothesis Test

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Submitted By divyark
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Saurabh Sunny Baghmar
MNGT: 6361

Problem Statement: To determine if saving from the total monthly income is gender biased.
Hypothesis: H0: Single Women save equal to single men from their total monthly income. (Null Hypothesis)

H0 = µwomen - µmen = 0

Introduction:

The thought behind this problem statement comes from the report which says that there is a huge difference between the number of single women applying for credit cards and men. There are studies done to project the spending/saving habits of men and women. Research shows that women and men have different interest areas where they like spending money [1]. These areas determine how much they spend. Men spend money mostly on eating out, sports ticket, drinking, cars and boys clubs. Whereas women like to spend money on clothes, jewelry, makeup/spa and other accessories. According to [2], the level of debt for men and women is different. Gender was more influential in predicting financial management practices than was affective credit attitude, with female students employing a greater number of financial practices. Research on credit card behavior [3] among college going men and women states that men apply for more than one credit card whereas women’s hold an average of one credit card during their college education. The identification of gender differences may also indicate the need to closely examine individual differences about money management [4].
Accounting the study on 40 people spending/saving habits the following hypothesis test is done to determine the reality of the fact about their saving.
References:
1. http://www.smartmoneydaily.com/personalfinance/do-men-and-women-spend-differently.
2. http://www.time.com/time/magazine/article/0,9171,1607265,00.html
3. Journal of Consumer Affairs. Volume 34, Issue 1, p 113-133.
4. Journal of Family & Consumer Sciences Education, Vol. 26, No. 1, Spring/Summer, 2008

Literature Review

This study discusses the spending and saving nature between single men and women. The process of this discussion is followed by a hypothesis test. This research only includes single men and women who are employed/student and has their very own source of income.

Physiological research done on college students reveal that male students were in more stress than female and the reason behind was that they were in more depth as compared to female students [1]. Male students were more likely to spend money on parties and hanging out as compared to their female counterparts. Beer, alcohol, smoke and eating out are the very area where male students like to spend their money. Behavioral/social study suggests that males are more prone to smoke and consuming alcohol than female [2].

Researchers have been trying to find out what are the most prominent areas where men and women would like to spend. Studies indicate that there is a huge difference in the interest of spending money [3]. Women spend more money on themselves than men. Women like to spend money on cosmetics, spa/beauty treatment, personal health and home decoration, whereas men spend on drinks/smoke, eating out, travelling and clubs.

Women are good when it comes on money management as they buy stuff which is cost effective rather than men. Women always give a second thought to whatever they buy and always look for cheap alternative whereas men like to spend on go [4].

All the studies done during this process leads toward the fact that women are ahead than men when it comes to save money. A hypothesis test is to be done to verify this fact.

1. Attitudes of College Students toward Credit Cards: A Comparison of Credit Card User Types.

2. A longitudinal study of work load and variations in psychological well-being, smoking, and alcohol consumption.

3. Journal of Applied Physiology. Volume 15, Issue 5, pages 354–373, August 1985

4. Journal of Consumer Studies & Home Economics Volume 12, Issue 1, pages 87–94, March 1988.

Method and Formula:

The primary source of gathering the data for this test is online survey done among friends on Facebook. As per the requirements of this hypothesis test it was required to get the percentage of saving done from their monthly income by single men and women. 20 single men and women were asked to calculate the percentage of their income they save. The data obtained is tabulated below.

|S/N |Single Male Percentage Saving |Single Women Percentage Saving |
|1. |6% |13% |
|2. |5% |8% |
|3. |0% |14% |
|4. |8% |9% |
|5. |10% |9% |
|6. |9% |17% |
|7. |12% |14% |
|8. |2% |12% |
|9. |12% |8% |
|10. |11% |11% |
|11. |3% |12% |
|12. |0% |12% |
|13. |5% |16% |
|14. |13% |13% |
|15. |17% |20% |
|16. |0% |7% |
|17. |8% |11% |
|18. |8% |15% |
|19. |5% |3% |
|20. |14% |14% |
|Mean | | |

Formula used for the Hypothesis Test:

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