Julianna Braley

Math 1040-008
Term Project: Starting Compensation for College Graduates

Introduction:
The purpose of this project was to analyze and to make statistical inferences based on
given data collected on compensation packages of 350 recent college graduates, respective of
their chosen field. This data was obtained by the US Department of Labor statistics in 2014. The
7 major fields examined were: Business, Communications, Computer Science, Education,
Engineering, Humanities & Social Sciences, and Math & Sciences with 50 people in each
category observed. These compensations ranged anywhere from around $23,000 all the way up
to about $80,000 across all disciplines, and took into account the sum of the salary and benefit
package.
In this project I organized and displayed this data in a way that is easy to interpret. The
histogram enables one to see the shape of the distribution, while the boxplot demonstrates the
shape as well as which observations would be considered outliers. I then constructed confidence
intervals. The confidence interval estimates I calculated were a 95% confidence interval estimate
for the mean compensation for students graduating in Humanities and Social Sciences as well as
an 80% confidence interval estimate for the proportion of students that started with a
compensation of over $50,000. In addition to this, I performed two hypothesis tests that first,
tested the claim that it can be said that students that graduate in Education have an average
starting compensation of under $35,000 with a significance level of .05. And second, tested the
claim 80% of students graduating with a college degree will find a starting compensation
package valued at over $40,000 with a significance level of .01. Finally, I provided a reflection
that evaluated just what these results meant, and what potential errors could have been made.

Julianna Braley
Math 1040-008
Term Project: Starting Compensation for College Graduates

Histograms:
The histograms roughly reflect the normal distribution I would expect to see when
examining compensation packages for each major type. While most of the distributions appear to
be symmetric, there are some exceptions such as the distribution for graduates of Humanities &
Social Sciences and Engineering degrees. The distributions for Mathematics and Sciences,
Computer Sciences, and Communications degrees seem to be normally distributed. While the
distributions for Business graduates and Education graduates are more roughly normally
distributed with Business being slightly skewed right. The Engineering and Humanities & Social
Sciences graduates have a roughly uniform distribution both being slightly skewed right. My
intended career as a registered nurse would fall under the Mathematics and Science which
follows a roughly normal distribution.
Compensation Amount for recent Business Graduates in 2014 Compensation Amount for recent Communications Graduates in 2014
15

20

10

15
10

Frequency 5

Frequency 5

Compensation amount in US dollars

Compensation Amount in US Dollars

Julianna Braley
Math 1040-008
Term Project: Starting Compensation for College Graduates
Compensation Amount for Recent Computer Science Graduates in 2014 Compensation Amount for Recent Education Graduates in 2014
20

20

15

15

10

10

Frequency 5

Frequency 5

Compensation Amount in US Dollars

Compensation Amount in US Dollars

Compensation Amount for Recent Engineering Graduates in 2014 Compensation Amount for Recent Humanities & Social Sciences Graduates in 2014
14
12
10
8
Frequency 6
4
2
0
50000 60000 70000 80000
Compensation Amount in US Dollars

Compensation Amount of Recent Mathematics and Sciences Graduates in 2014

20
15
10
Frequency 5
0

Compensation Amount in US Dollars

12
10
8
6
Frequency 4
2
0

Compensation Amount in US Dollars

Julianna Braley
Math 1040-008
Term Project: Starting Compensation for College Graduates

Boxplots:
The boxplots reflect that the data is roughly normally distributed for most fields. None of
the fields contain outliers except for Computer Science graduates. Computer Sciences contains 2
outliers that fall below the expected range. This would likely be due to the fact that many
Computer Science graduates are highly compensated, with the median at $59,836. So, if a
graduate makes quite a bit less than this, it would be considered unusual. Therefore, the observed
compensations of $46,785 and $48,219 fall more than 1.5 standard deviations below the first
quartile of $56,937.25. Normal distributions would be appropriate for most of these data
distributions.

Julianna Braley
Math 1040-008
Term Project: Starting Compensation for College Graduates

Confidence Interval Estimates:

A confidence interval is an estimate of the population mean. A
confidence interval states with a predetermined level of confidence that the
population mean falls within a certain range of values. The lower a
confidence level, the range of values will be narrower. However, a lower
confidence level means you are not as confident in your statement. In the
same respect, a higher confidence level will have a wider range of potential
values, but your statement can be made with more confidence. Confidence
intervals are useful in predicting a whole populations mean by just taking a
sample rather than observing the whole population.
So, in this project I constructed a 95% confidence interval estimate for
the mean starting compensation for students graduating in Humanities and
Social Sciences. I found the lower bound to be $36,774.58 and the upper

Julianna Braley
Math 1040-008
Term Project: Starting Compensation for College Graduates
bound to be $40,859.42. This result means that we can say with 95%
confidence that the mean compensation amount for all new US Humanities
and Social Sciences graduates will fall somewhere between $36,774.58 and
$40,859.42.
I also constructed an 80% confidence interval estimate for the
proportion of all students that will obtain a starting compensation amount
over $50,000. I found the lower bound to be .3918 and the upper bound to
be .4596. This means that it can be said with 80% confidence that the mean
proportion of all graduates that will make a starting compensation amount of
over $50,000 will be between 39.18% and 45.96%.

Hypothesis Tests:
A hypothesis test is a method of testing a claim by using sample data.
A hypothesis test includes a null hypothesis and an alternative hypothesis.
The null hypothesis is the original claim, an equality statement that is
believed to be true. The alternative hypothesis is a hypothesis that goes
against this original claim. A hypothesis test proves with a certain level of
significance if the null hypothesis can either be accepted, or believed to be
true. Or if a null hypothesis can be rejected; cannot be true.
The first hypothesis test I conducted for this project was to test the
claim that students graduating in Education have an average starting
compensation under $35,000. It was decided that this would be found using
a .05 significance level, or we could say with 95% confidence. To find this, I

Julianna Braley
Math 1040-008
Term Project: Starting Compensation for College Graduates
first determined the null hypothesis and the alternative hypothesis. The null
hypothesis stating that the mean is $35,000 and the alternative hypothesis
being that the mean was less than $35,000. To test this, I first determined
that this would be a left tailed test and that alpha would be below $35,000.
Knowing this, I figured that because the sample mean of Education
graduates was $40,021, this would be to the right of where $35,000 was
centered on the distribution and therefore this test statistic would not fall
within the given rejection region. As a result of this, it was found that we
would fail to reject the null hypothesis, or in other words we find the
statement that students graduating in Education have an average starting
compensation of $35,000 to be plausible.
In the second hypothesis test I conducted I tested the claim that 80%
of students graduating with a college degree will find a starting
compensation package valued at over $40,000. This was to be conducted
with a .01 significance level. I found the null hypothesis to be that the
proportion of students graduating with a starting compensation of over
$40,000 would be equal to .80. The alternative hypothesis is that this
proportion of students is not equal to .80. To test this I first found the sample
proportion which was .7686. After I found this, I calculated the test statistic
and found this to be -1.469. After comparing this to the critical value of
-2.576 that was determined by alpha over two, I concluded to fail to reject
the null hypothesis. Therefore, we can conclude with this evidence that we
can say with 99% confidence that the mean proportion of students that

Julianna Braley
Math 1040-008
Term Project: Starting Compensation for College Graduates
graduate with a college degree that will find a starting compensation
package over $40,000 is 80%.

Reflection:
The conditions that needed to be met in order to correctly make
confidence interval estimates and to test hypothesis tests were met in all
four of the problems. For the first confidence interval I constructed for
students graduating in Humanities and Social Sciences and for the first
hypothesis test I performed for the claim that Education students had a
mean starting compensation under $35,000, these two problems satisfied
the conditions that needed to be met. While neither were taken from data
sets that were normally distributed, they both had sample sizes over 30.
For the second confidence interval I created involving the proportion of
students that had a compensation starting over $50,000 and for the second
hypothesis test I conducted for the proportion of students that found a
starting compensation of over $40,000, these 2 problems also satisfied the
conditions that they needed to meet. N multiplied by p times q was greater
than 10 and the proportion of the population sampled was less than 5%.
While the conditions to make predictions using this data are met, there
may be underlying errors that had not been accounted for that could lead to
inaccuracies. For example, there were only 50 people observed for each
sample. These 50 people may not accurately represent the actual population
compensation rate for students graduating in their respective fields.

Julianna Braley
Math 1040-008
Term Project: Starting Compensation for College Graduates
Especially if this simple random sample included say for example 5
compensation rates of graduates in a densely populated state like California
and 0 compensation rates for those in a relatively rural state like Montana. If
this had occurred it could have the effect of potentially skewing the data
higher. To potentially improve the sample method and therefore solidify the
estimates and testing, the US Department of Labor could take a larger
sample from each major field and perhaps be sure to include findings from
every state.