OK kids, here's the deal. An economist who shall remain nameless (but he writes for the NYT) thought he blew up the theory that the recession was due to a misallocation of labor across sectors, because the change in unemployment from Dec-07 to Dec-08 was high in several states that didn't experience a big housing bubble.
I thought that was an odd measure, and so I ranked states (A) by their change in unemployment rates from Jun 06 to Dec 08, and then I ranked the states again by (B) their percentage change in house prices from 2q 06 to 4q 08.
I found that 5 of the top 6 states in column (A) were in the top of column (B). So that seems like a very strong relation.
Can someone talk me through how I would compute the chance that this just happened randomly?
For extra credit, how do we deal with the fact that after I saw the results, I came up with the best way to describe them? In other words, I originally looked at the top 10 states in both lists. But since there were no more matches in the 7th through 10th slots, I just dropped them and reported "5 out of the top 6 match." So I'm thinking this cherry picking after the fact may be contributing to the impressiveness of my result, but maybe not?