In Topic 2, we considered an introduction to correlation, learning that the correlation coefficient, \(r\), indicates the strength of the linear relationship between two variables. Let's see what the correlation is between the income and happiness variables.
Considering the above scatter plot, see if you can guess the correlation between the two variables:
Enter your guess in the box by choosing a number between 0 and 1, rounded to two decimal places (for example 0.12 or 0.88). When your answer is close, i.e. within 0.05 of the correct correlation, the box will turn green.
The correlation is greater than 0.65.
In the following sections, we will see how to test for the significance of the correlation coefficient, and discuss other useful considerations when looking at correlation.