Wine Nerds: Is there a Correlation between WS Scores & Prices for Napa Wines

This hypothesis testing is to try to understand if there is correlation between the average scores given by wine spectator and the average prices for wineries in Napa.

Step 1 Define my Hypothesis

Ho: There is no correlation between WS Score and Price for Napa Wines

H1: there is a correlation between WS Score and price for Napa wines

Step 2 run the regression Analysis

The regression equation is

Napa Price = - 2040 + 23.5 Napa Score

Predictor        Coef       StDev          T        P

Constant      -2040.3       318.8      -6.40    0.000

Napa Sco       23.488       3.557       6.60    0.000 

S = 33.21       R-Sq = 57.7%     R-Sq(adj) = 56.4%

Analysis of Variance

Source            DF          SS          MS         F        P

Regression         1       48111       48111     43.61    0.000

Residual Error    32       35301        1103

Total             33       83412

Unusual Observations

Obs   Napa Sco   Napa Pri         Fit   StDev Fit    Residual    St Resid

 21       92.5      68.33      132.36       11.72      -64.03       -2.06R 

 29       94.4     275.00      176.99       17.92       98.01        3.51RX

R denotes an observation with a large standardized residual

X denotes an observation whose X value gives it large influence.

Step 3 Explain the results

We Reject the null hypothesis.

The P-value for Napa Score  is <.05 which leads us to conclude that Score is a good predictor of Price and there is a correlation between Score and Price

The R-sq(adj) value is high, which tells us that the regression equation explains a high percentage of the variation in the process (close 60%).

Step 4 Conclusion

It looks like that score is a strong predictor of a price for Napa wines.

Note:"Correlation does not imply causation"