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RefYear SeverityIndex GoogleTrends 1 107.22 15.16 2 102.41 26.33 3 100 22.83 4 94.31 15.67 5 88.85 14.58 6 85.26 13 7 80.53 12.83 8

RefYear SeverityIndex GoogleTrends
1 107.22 15.16
2 102.41 26.33
3 100 22.83
4 94.31 15.67
5 88.85 14.58
6 85.26 13
7 80.53 12.83
8 74.5 12.58
9 73.01 14.33
10 66.92 17.41
11 65.38 17.5
12 68.44 17
13 70.1 17.5
14 70.67 16
15 72.16 17

The data reported in the Excel file CrimeSeverity comprises two variables, namely, Severity Index (which represents the non-violent crime severity index obtained from Statistics Canada's CANSIM database) and Methamphetamine (which represents the Google Trends search index in Canada using methamphetamine as the keyword). The yearly data covers the period from 2004 (the first available Google Trends data) to 2018.

  1. Draw a scatterplot of the relationshipbetween the Severity Index and methamphetamine search index and comment on the relationship between the two variables.
  2. Use GRETL to compute the correlation between the Severity Index andmethamphetamine search indexand comment on the relationship between the two variables.
  3. Run a simple linear regression of the severity index (the dependent variable) on the methamphetamine search index (the independent variable). Based on this regression results, do you think that the search index is a useful predictor of the severity index? Hint: you could look at the estimated slope coefficient as well as goodness-of-fit as measured by R-squared.
  4. Interpret the R-squared value you obtained in part (c). Hint: R-squared is the percentage of the variation in the dependent variable explained by variation in the independent variable(s).

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