Purpose

The purpose of this assignment is to practice working with quantitative data. You will analyze the relationship between development and corruption.

Course Learning Outcomes

CLO1 Calculate basic measures of poverty, inequality and development

CLO5 Use economic models and empirical methods to evaluate development policy

Skills

The purpose of this assignment is to practice the following skills:

● use software to view and manipulate data sets

● perform basic statistical analysis

● draw inferences about policies and programs based on statistical analysis

Knowledge

This assignment will require you to be familiar with Microsoft Excel or Google Sheets and basic statistics.

Task

To complete this assignment, you will:

1. The included country data come from several databases (see data dictionary below for details). Your task is to analyze variables potentially related to levels of corruption and write a brief report in which you provide readers with some data visualizations that support your hypotheses about how these variables relate to levels of corruption. Review the related data table (Excel file), and the report template (Word file).

2. Save the Excel file and the Word report template where you can access them (and consider adding your surname to the file titles). The following steps will guide the analysis that you need to complete in your Excel data set as well as generating the numbers and explanations that you need to add to your report.

3. [5 points]. In your Word report template under Overview of Global Corruption , provide a brief discussion of the Corruption Index.   

4.        [5 points]. Use Excel (or some other tool) to create a scatterplot of log of GDP per capita (y-axis) against the corruption index (x-axis). Provide the scatterplot along with a brief description of what you see in the relationship between these two variables. Here’s what you need to do:

3.1 Create a variable that takes the natural log of GDPperCap.

3.2 Use software to produce a scatterplot.

3.3 Interpret the scatterplot and describe what you observe in the relationship between this variable and the Corruption Index.

3.4 In your Word report template under the Corruption and GDP per capita heading, explain in your own words why a change in corruption might cause a change in GDP per capita. Include in your explanation an analysis of the possibility of reverse causality.

5. [30 points] Develop your analysis of the impact of corruption by analyzing the relationship between levels of perceived corruption and a variable of your choosing. Insert this analysis under the Corruption and [variable of your choosing] heading (making sure to change the heading). Here’s what your analysis should include:

5.1 Choose one other variable in the dataset that you think might be related to corruption.

5.2 Create a graph to show the relationship between this variable and corruption.

5.3 Create a separate graph to show the relationship between this variable and log of GDP per capita.

5.4 Use a sentence or two to describe what you observe in these two graphs.

5.5 Would you classify your chosen variable as a confounder (this variable is correlated with both corruption and GDP per capita and can be used to show that the relationship between corruption and GDP per capita is spurious), an instrumental variable (this variable is only related to GDP per capita through its relationship with corruption and therefore this variable can help us understand the causal effect of corruption), a control variable (this variable helps explain GDP per capita, so that it reduces the noise when examining the data, and might be correlated with corruption), a mediating (this type of variable affects GDP per capita but is also affected by corruption) or a moderating variable (this type of variable augments or diminishes the impact of corruption)? Please give an explanation for how you would classify the variable that you have chosen. (Note: There are plenty of correct ways to answer this question. As the analyst you get to decide how you will treat the variables, but please justify your decision).

 

6. [10 points] Write a brief conclusion (2 to 3 sentences) to your analysis of causes of corruption in questions 4 and 5. Reflect back on your analysis and interpretation. What stands out as surprising or interesting in the analysis? What lessons could be learned? What new questions does this analysis raise?

 

7. Review your Word report and your spreadsheet. Submit both to the appropriate CANVAS assignment.

Evaluative Criteria

Successful assignments will

· respond to all of the questions

· make accurate calculations

· draw easily interpretable (well-labeled, visually clear) graphs

· provide complete and detailed explanations

Data Dictionary

(Data are from 2010)

 

Variable	Description
Corruption	The corruption perception index, as measured by Transparency International. Higher numbers indicate greater perception of corruption.
Country	The name of the country.
DemocracyIndex	The democracy index, as measured by the Economist Intelligence Unit. Higher scores indicate more democratic countries.
EconFreedom	The economic freedom index, as measured by The Heritage Foundation. Higher scores indicate greater economic freedom (ease of starting a business, free trade, etc.).
GDPperCap	GDP per capita, measured in thousands of 2010 US dollars.
HumanDevelop	The human development index, as measured by the UN. The human development index is a composite statistic of life expectancy, education, and income. Higher scores indicate greater human development.
OECD	A dummy variable indicating countries that are members of the Organization of Economic Cooperation and Development.
PressFreedom	The press freedom index, as measured by Freedom House. Higher scores indicate greater press freedom.
Tropics	A dummy variable indicating countries in the tropics.