Performing a chi-square test
The chi-square independence test compares proportions of successes of one categorical variable across the categories of another categorical variable.
Trade deals often use a form of business shorthand in order to specify the exact details of their contract. These are International Chamber of Commerce (ICC) international commercial terms, or incoterms for short.
The late_shipments dataset includes a vendor_inco_term that describes the incoterms that applied to a given shipment. The choices are:
EXW: "Ex works". The buyer pays for transportation of the goods.CIP: "Carriage and insurance paid to". The seller pays for freight and insurance until the goods board a ship.DDP: "Delivered duty paid". The seller pays for transportation of the goods until they reach a destination port.FCA: "Free carrier". The seller pays for transportation of the goods.
Perhaps the incoterms affect whether or not the freight costs are expensive. Test these hypotheses with a significance level of 0.01.
\(H_{0}\): vendor_inco_term and freight_cost_group are independent.
\(H_{A}\): vendor_inco_term and freight_cost_group are associated.
late_shipments is available, and the following have been loaded: matplotlib.pyplot as plt, pandas as pd, and pingouin.
This exercise is part of the course
Hypothesis Testing in Python
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
# Proportion of freight_cost_group grouped by vendor_inco_term
props = ____
# Print props
print(props)