The Department of Labor’s division of workers’ compensation programs believes that it is unfair to charge that rising medical costs for workers’ compensation programs are the result of program expansion. The department believes that costs rise because medical costs in general rise. Using the total amount of money spent for workers’ compensation medical benefits in millions of dollars (Y), the department runs a regression using the Consumer Price Index (CPI) for medical care as the independent variable (CPIMED = 100 in 1967). This produces the following regression:

Interpret this regression. Present a hypothesis and a null hypothesis, and evaluate the hypotheses. State your conclusions in plain English.

Transcribed Image Text:

Ŷ 927.60+ 17.17X sb .22 Sx= 106.2 N = 45 = .9949 7 =