Wine Nerds: Is there Correlation between WS Scores & Prices for Sonoma 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 Sonoma.

Step 1: Define the Hypothesis

Ho: There is no correlation between WS score and Price for Sonoma wines

H1: there is a correlation between WS score and price for Sonoma wines

Step 2 run the regression Analysis

The regression equation is

Sonoma Price = - 389 + 4.78 Sonoma Score

Predictor           Coef       StDev           T        P

Constant       -388.5       106.2      -3.66    0.001

Sonoma S        4.783       1.185       4.04    0.000

S = 9.461       R-Sq = 32.4%     R-Sq(adj) = 30.4%

Analysis of Variance

Source               DF          SS          MS          F            P

Regression         1      1458.3      1458.3     16.29    0.000

Residual Error    34      3043.3        89.5

Total             35      4501.6

Step 3 Explain the results

We reject the null hypothesis.

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

The R-sq(adj) value is low, which tells us that the regression equation can only explains about 30% of the variation, we therefore conclude that there are other factors that can explain variation.

Step 4 Conclusion

There is a correlation between scores and prices other factors are at play.

Note:"Correlation does not imply causation" 

Max.