Data Insight: Per Capita State Domestic Product, Unemployment and Poverty

Research Questions:

1. Is there any Relationship between Urban Population Size and Poverty in State
2. Is there any Relationship between Per Capita SDP and Poverty in State
3. Is there any Relationship between Unemployment Rate and Poverty in State

NULL Hypotheses:

1. There is no Significant Effect of Level of Urbanization on Poverty in State
2. There is no Significant Effect of Per Capita SDP on Poverty in State
3. There is no Significant Effect of Unemployment on Poverty in State

Lets Consider Following Data Table:

Table-1: Per Capita State GDP, Unemployment and Poverty Rate

SL.No.	State Name	Urban Population (%) (2011)	Per Capita Net State Domestic Product 2004-05 Prices (2010-11)	Unemployment Rate (2009-10)	Poverty Rate (2009-10)
	Tamil Nadu	48.5	51,928	11.7	17.1
	Maharashtra	45.2	62,729	6.3	24.5
	Gujarat	42.6	52,708	5.0	23.0
	Karnataka	38.6	39,301	4.2	23.6
	Punjab	37.5	44,752	6.5	15.9
	Haryana	34.8	59,221	5.5	20.1
	West Bengal	31.9	32,228	7.0	26.7
	Andhra Pradesh	33.5	40,366	7.0	21.1
	Kerala	47.7	49,373	16.7	12.0
	Madhya Pradesh	27.6	22,382	6.5	36.7
	Rajasthan	24.9	8,571	3.3	24.8
	Uttar Pradesh	22.3	26,436	5.3	37.7
	Orissa	16.7	25,708	7.9	37.0
	Bihar	11.3	13,632	5.7	53.5
	Assam	14.1	21,406	6.5	37.9
	Himachal Pradesh	10.0	47,106	4.4	9.5

Following is the Statistical Results of Correlation, Regression, T-Test and F-Test.

Table-2: Correlation Table

	Urban Population Percentage	Per Capita SDP	Unemployment Rate	Poverty Rate
Urban Population Percentage	1
Per Capita SDP	0.684198483	1
Unemployment Rate	0.471619651	0.289517784	1
Poverty Rate	-0.559544047	-0.703059388	-0.283835122	1

Interpretation: Based on Correlation Coefficient Value (0.68), Urbanization is Strongly Correlated to Increased Per Capita SDP in the State. Unemployment is More Related to Not Having More Urbanization rather than Per Capita SDP Levels. Coming to Poverty, According to Correlation Coefficient Values, all came NEGATIVE, indicating that Urban Population Percentage, Per Capita SDP or Unemployment rate are not Related to Poverty. That means There Could be Other Reasons such as ill-health or Medical Problems for the Poverty.

Table-3: Regression Table

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.712696
R Square	0.507936
Adjusted R Square	0.38492
Standard Error	9.046562
Observations	16
ANOVA
	Df	SS	MS	F	Significance F
Regression	3	1013.761	337.9203	4.129021	0.031613
Residual	12	982.0835	81.84029
Total	15	1995.844
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%	Lower 95.0%	Upper 95.0%
Intercept	46.80241	6.912383	6.770807	1.98E-05	31.74162	61.86319	31.74162	61.86319
Urban Population Percentage	-0.10864	0.270649	-0.40142	0.695166	-0.69834	0.481049	-0.69834	0.481049
Per Capita SDP	-0.00043	0.000196	-2.17698	0.050164	-0.00085	3.58E-07	-0.00085	3.58E-07
Unemployment Rate	-0.18351	0.819968	-0.2238	0.826676	-1.97007	1.603046	-1.97007	1.603046

Interpretation: From Regression Result, p-values in all cases are greater than 0.05. This indicates that neither of Urban Population Percentage nor Per Capita SDP, nor Unemployment rate have impact over Poverty in the Country. However, Having Lesser Per Capita SDP has minor impact on Poverty level in the State. Next, we will see what is t-test and f-test are saying.

Table-4: Effects of Unemployment Rate on Poverty Using T-Test

t-Test: Paired Two Sample for Means
	Poverty Rate	Unemployment Rate
Mean	26.31875	6.84375
Variance	133.0562917	10.46395833
Observations	16	16
Pearson Correlation	-0.283835122
Hypothesized Mean Difference	0
Df	15
t Stat	6.069990638
P(T<=t) one-tail	1.07224E-05
t Critical one-tail	1.753050356
P(T<=t) two-tail	2.14447E-05
t Critical two-tail	2.131449546

Interpretation: t-stat 6.06 (which is greater than tabulated value 2.131), leads to rejection of NULL hypothesis. Seconded by P-value less than 0.05. Based on these two statistical results we can say that, Unemployment Rate Has Significant Effect on Poverty. Next, lets see the f-test as well.

Table-5: Impact of Unemployment on Poverty Using F-Test

F-Test Two-Sample for Variances
	Poverty Rate	Unemployment Rate
Mean	26.31875	6.84375
Variance	133.0562917	10.46395833
Observations	16	16
Df	15	15
F	12.71567484
P(F<=f) one-tail	6.37924E-06
F Critical one-tail	2.403447071

Interpretation: Here, F-Critical Value 2.40 (which is greater than tabulated f-critical value: 2.33) at both 15 degrees of freedom and 0.05 significance level. This leads to Rejection of NULL hypotheses. That means, Unemployment rate has significant Effect on Poverty. Next, we will study is there any significant effect of Per Capita SDP on Poverty using t-test and f-test.

Table-6: Effect of Per Capita SDP on Poverty Using T-test

t-Test: Paired Two Sample for Means
		Poverty Rate	Per Capita SDP
	Mean	26.31875	37365.4375
	Variance	133.0562917	268543600.8
	Observations	16	16
	Pearson Correlation	-0.703059388
	Hypothesized Mean Difference	0
	Df	15
	t Stat	-9.109650709
	P(T<=t) one-tail	8.39769E-08
	t Critical one-tail	1.753050356
	P(T<=t) two-tail	1.67954E-07
	t Critical two-tail	2.131449546

Interpretation: In this case, t-stat value -9.109 (Which is less than Tabulated value of 2.131). This leads to Acceptance of NULL hypothesis. That means, Per Capita SDP has no significant effect on Poverty. Next, Lets See Effect of Per Capita SDP on Poverty Using f-Test.

Table-7: Impact of Per Capita SDP on Poverty

F-Test Two-Sample for Variances
	Poverty Rate	Per Capita SDP
Mean	26.31875	37365.4375
Variance	133.0562917	268543600.8
Observations	16	16
Df	15	15
F	4.95474E-07
P(F<=f) one-tail	0
F Critical one-tail	0.416069075

Interpretation: Here, F-Critical Value is 0.41 (which is less than f-critical of tabulated value: 2.33). This leads to Acceptance of NULL hypothesis. That means, there is no Significant Effect of Per Capita State SDP on Poverty in a State based on f-test.

Overall, Unemployment rate is to be given importance when we are discussing Poverty Level in the State. Other Factor such as Per Capita SDP has no effect on Poverty. But, the data says that, the more is the Level of Urbanization, the less would be the Poverty Level in the state (refer Table-1).

Hope this is Useful.

Best Wishes,

Dr.Goparaju Purna Sudhakar

(https://gpsudhakar.com)

Data Source: Census of India (2011)