Question 1 (100 marks)

Debt is a persistent problem, especially among low-income families in Singapore who struggle most with the rising costs of living and unexpected expenses. To pay for such expenses, they often accumulate unsecured debts such as credit card bills, personal loans and borrowing from licensed moneylenders. Effective debt management is essential as debt has negative consequences beyond one’s finances. A local study by researchers from NUS and SUSS (Ong et al., 2019) has shown that chronic debt impairs one’s decision-making ability and traps them in a vicious poverty cycle.

Suppose you are a volunteer with a social service agency that helps low-income families to manage their debt. Some of the agency’s services include financial literacy workshops, hosting monthly support group sessions where participants offer mutual encouragement and share coping strategies, and working out a debt repayment plan with families. You have been tasked to help the agency to better understand the families that it has served by examining the effectiveness of two common debt repayment strategies that are used: Snowball Method and Avalanche Method.

Note:

• Snowball method – pay off the debt with the smallest outstanding loan amount first
• Avalanche method – pay off the debt with the highest interest rate first

Your volunteer manager sends you a dataset (HBC203_TMA02 Dataset.csv.) that contains information about the families that the agency has served in the past six years.

(For Mac users: Please use a web browser other than Safari to download the .csv file from Canvas. Otherwise, you may be unable to open the downloaded file.) Table 1 provides a brief description of each variable in the dataset.

Table 1

He also sends you three Research Questions (RQs) that he would like you to address based on the dataset:

RQ1. Did families with more dependents have more unpaid debt?

RQ2. Did families with lower average monthly household income tend to choose the Snowball method or the Avalanche method?

RQ3. Which debt repayment strategy (Snowball method or Avalanche method) helped families to fully repay their debt more quickly?

PART 1 (80 marks)

For each Research Question (RQ), answer parts a) to e). Present your answer to each RQ separately and in sequence (i.e., RQ1, followed by RQ2 and so on).

(a) Identify the independent and dependent variables.

(b) Identify the most appropriate statistical test and explain why it is the most appropriate. Assume that all assumptions of the statistical test you identified are met and there are no concerns about small sample size.

(c) Using Jamovi, conduct the statistical test that you identified in b) to analyse the given dataset to address the researchers’ objective. Show the Jamovi output by copying and pasting ALL the output that is necessary to interpret the results in your answer.

Note:

• The identified statistical test must be taught in HBC203.
• Use an alpha level of .05_two-tailed to determine statistical significance.
• To copy the output, either take a screenshot of the output (preferred) or right click on the respective table(s) and select Copy from the dropdown menu.

(d) Report the results in APA format and interpret the results in relation to the agency’s objective.

(e) Discuss whether your findings are expected or unexpected.

• If your findings are expected, use other studies to show how the findings are similar. If your findings are unexpected, explain why they differ from other studies.
• Use at least one academic paper (i.e., journal article) per Research Question to support your explanations. Include the references (in APA style) as an appendix at the end of your submission.

PART 2 (20 marks)

Besides the 3 RQs that the volunteer manager has asked you to address in PART 1, propose two more Research Questions that would be useful to answer. You may propose Research Questions that require the collection of additional variables that are not in the given dataset.

(f) For each Research Question that you propose:

• Use at least one academic paper (i.e., journal article) to explain the significance of the Research Question.
• If additional variables need to be collected, specify what they are and how they can be collected.
• Then, identify the most appropriate statistical test and explain why it is the most appropriate. The identified statistical test must be taught in HBC203. (You do not need to perform the analyses or run the statistical test.)

Reference

Ong, Q., Theseira, W., & Ng, I. Y. H. (2019). Reducing debt improves psychological functioning and changes decision-making in the poor. Proceedings of the National Academy of Sciences, 116(15), 7244–7249. https://doi.org/10.1073/pnas.1810901116

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