TB LAB Qu. 08-56 Based on Lab 8-2 Excel Classifying Loan Acceptance Using Lending Club Data...

Based on Lab 8-2 Excel Classifying Loan Acceptance Using Lending Club Data and the regression results below predicting loan acceptance, how is longer employment length (Emp Length) associated with loan acceptance?

SUMMARY OUTPUT

Regression Statistics

Multiple R

0.3038

R Square

0.0923

Adjusted R Square

0.0923

Standard Error

0.2201

Observations

684122

ANOVA

df

SS

MS

F

Significance F

Regression

3

3,369.3982

1,123.1327

23179.20074

0.0000

Residual

684118

33,148.4818

0.0485

Total

684121

36,517.8800

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Intercept

0.0756

0.0008

92.7265

0.0000

0.0740

loan_amnt

(0.0000)

0.0000

(35.6350)

0.0000

(0.0000)

Emp Length

0.0240

0.0001

247.1157

0.0000

0.0238

DTI Bucket

(0.0228)

0.0003

(70.8158)

0.0000

(0.0234)

Question

TB LAB Qu. 08-56 Based on Lab 8-2 Excel Classifying Loan Acceptance Using Lending Club Data...

Based on Lab 8-2 Excel Classifying Loan Acceptance Using Lending Club Data and the regression results below predicting loan acceptance, how is longer employment length (Emp Length) associated with loan acceptance?

SUMMARY OUTPUT

Regression Statistics

Multiple R

0.3038

R Square

0.0923

Adjusted R Square

0.0923

Standard Error

0.2201

Observations

684122

ANOVA

df

SS

MS

F

Significance F

Regression

3

3,369.3982

1,123.1327

23179.20074

0.0000

Residual

684118

33,148.4818

0.0485

Total

684121

36,517.8800

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Intercept

0.0756

0.0008

92.7265

0.0000

0.0740

loan_amnt

(0.0000)

0.0000

(35.6350)

0.0000

(0.0000)

Emp Length

0.0240

0.0001

247.1157

0.0000

0.0238

DTI Bucket

(0.0228)

0.0003

(70.8158)

0.0000

(0.0234)

BlackTom AI · Accepted Answer

Question restatement: Based on Lab 8-2 Excel Classifying Loan Acceptance Using Lending Club Data and the regression results, how is longer employment length (Emp Length) associated with loan acceptance?
Answer options:
- The greater the length of employment, the greater the chance of loan acceptance
- The lower the length of employment, the greater the chance of loan acceptance
- The relationship between length of employment and loan acceptance cannot be determined.
- The length of employment is not associated with loan acceptance

Now, let's evaluate each option in light of the regression output provided.
Option 1: The greater the length of employment, the greater the chance of loan acceptance
This option aligns with the reported regression coefficient for Emp Length, which is 0.0240 with a very small p-value (0.0000). A positive coefficient indicates that as Emp Length increases, the predicted likelihood (or log-odds, depending on the model) of loan acceptance increases, assuming other variables are held constant. The small p-value signifies that this positive relationship is statistically significant and unlikely due to random chance. Therefore, this option correctly describes the direction and significance of the association.
Option 2: The lower the length of employment, the greater the chance of loan acceptance
This is the opposite of what the positive Emp Length coefficient implies. If Emp Length were negatively related to loan acceptance, we would expect a negative coefficient. Since the coefficient is positive and significant, this option misstates both the direction and the interpretation of the result.
Option 3: The relationship between length of employment and loan acceptance cannot be determined.
The regression output provides a quantified estimate (0.0240) and a p-value (0.0000) for Emp Length, which indicates that there is a determinate, statistically testable relationship within this model. Claiming that the relationship cannot be determined ignores the presented coefficient and its statistical significance.
Option 4: The length of employment is not associated with loan acceptance
A null association would correspond to a coefficient near zero with a non-significant p-value. Here, the coefficient is 0.0240 and the p-value is 0.0000, indicating a significant association. Therefore, this option incorrectly states that there is no association.

In summary, Option 1 correctly reflects the positive and statistically significant relationship between employment length and loan acceptance, while Options 2, 3, and 4 either misstate the direction, ignore the computed statistic, or mischaracterize the significance of the relationship.

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