Hypothesis Identification Analysis Ã¯Â¿Â½ PAGE Ã¯Â¿Â½1Ã¯Â¿Â½
The first credit card was issued in 1950. Diner's Club was the first to do so and issued their newly created card to 200 customers who could use the card at 14 different restaurants in New York. By the end of 1950, 20,000 customers were using the Diner's Club credit card (Rosenberg, n.d.). Leap forward to the 21st century, and in July, 2005, a research study showed the level of personal savings was negative 0.6%. The hypothesis of the study states Americans spend more than they earn (Retirement, 2005).
Only the null hypothesis is stated in the article. An alternative hypothesis could be written to state Americans spend less than or equal to what they earn. The alternative hypothesis states a direction of less than; therefore, the test would be a one-tailed test of significance. In testing the null and alternative hypothesis, they are considered to be mutually exclusive.
Americans cannot both spend more than they earn or spend less than or equal to what they earn.
The hypothesis is supported by discussing how people live above their means and purchases items on credit. Most people are not disciplined to save and as a result spend beyond their means. They are also not taking retirement plans and needs into consideration and are not taking the necessary steps to save for future spending needs. When people spend more than they earn they are generally not saving money and failing to save for the future will have affects on many people. Their standard of living will drop significantly once they retire and they will need to rely on any available Social Security payments, employer-sponsored pension payments, and most likely will need to pay for their own health care. "According to the Employee Benefits Research Institute, the...