Case Study 1 Legal AdvertisingDoes it Pay? A Law Suit Two former - - PowerPoint PPT Presentation

ST 430/514 Introduction to Regression Analysis/Statistics for Management and the Social Sciences II

Case Study 1 Legal Advertising–Does it Pay?

A Law Suit Two former law partners:

• ne specializes in personal injury (PI);
• ne specializes in workers’ compensation (WC).

Advertising focused on PI: Which partner benefited, and which should pay for it?

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ST 430/514 Introduction to Regression Analysis/Statistics for Management and the Social Sciences II

Available data for 48 months: Advertising expenditure; Number of new PI cases; Number of new WC cases. Because the effect of advertising is not immediate, focus was on total expenditure over previous 6 months.

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ST 430/514 Introduction to Regression Analysis/Statistics for Management and the Social Sciences II

Plot the data:

legal <- read.table("Text/Cases/LEGALADV.txt", header = TRUE, na.strings = "*") pairs(legal[, c("NewPI", "NewWC", "AdvExp6")])

For each type of case, fit a linear model E(y) = β0 + β1x, where y is yPI or yWC, and x is advertising expenditure. Test the significance of the association of y with x. Examine the confidence interval for each slope.

3 / 4 Case Study 1 Legal Advertising–Does it Pay?

ST 430/514 Introduction to Regression Analysis/Statistics for Management and the Social Sciences II

Conclusions: The number of new PI cases is significantly related to advertising. The number of new WC cases is not significantly related to advertising. A court ruled that the PI partner should “bear the brunt of the advertising expenditures.”

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