Focus on the Headline Unemployment Rate

This lesson plan explains why the composition effect makes it difficult to describe diverse populations with a single statistic. It provides instructions on building the graph below and includes prompts for both in-class and out-of-class assignments.

Storytelling with Data and FRED Interactive Modules

Data Citations: Learn how to use FRED® to create good data citations. The FRED Interactive modules can be embedded in your learning management system.

Quiz Yourself on the Composition Effect

The graph above shows the labor force participation rate of men and women veterans of the U.S. Armed Forces. The men’s rate is the solid orange line; the women’s rate is the solid magenta line; and the average across both genders is the dashed red line

Q1. Whose labor force participation rate was the highest?

Q2. Briefly explain why the labor force participation rate of all veterans is closest in value to the labor force participation rate of men veterans.

The graph above shows the year-to-year growth rate of average home prices in the United States (blue bars) in its 20 largest metropolitan areas (red bars).

Q1. Do the blue bars and red bars generally extend in the same direction or in opposite directions?

Q2. Briefly describe what happened in 2010 to overall home prices and home prices in the 20 largest metropolitan areas. Briefly explain how that illustrates the composition effect.

You can share these graphs with your students using this dashboard. To customize this dashboard, just click the “Save to My Account” button at the top of the dashboard.