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Regression Analysis 2

Regression analysis is a statistical technique used to model the relationship between a dependent variable and one or more independent variables. The goal is to build a regression equation that can estimate, determine the effect of, and predict the dependent variable based on the independent variables. Some common uses of regression analysis include predicting demand based on price and advertising, determining the relationship between apartment price and size, and examining the relationship between medical variables like pulmonary blood flow and volume. The main types of regression analysis are simple linear regression (one independent variable), multiple linear regression (more than one independent variable), and polynomial regression (when the relationship is modeled as a polynomial function).

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131 views7 pages

Regression Analysis 2

Regression analysis is a statistical technique used to model the relationship between a dependent variable and one or more independent variables. The goal is to build a regression equation that can estimate, determine the effect of, and predict the dependent variable based on the independent variables. Some common uses of regression analysis include predicting demand based on price and advertising, determining the relationship between apartment price and size, and examining the relationship between medical variables like pulmonary blood flow and volume. The main types of regression analysis are simple linear regression (one independent variable), multiple linear regression (more than one independent variable), and polynomial regression (when the relationship is modeled as a polynomial function).

Uploaded by

Md Raihan Ali
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© © All Rights Reserved
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Regression Analysis

Regression analysis is a statistical technique that


serves as a basis for studying the dependence of
one variable, called dependent variable, on one
or more other variables, called explanatory
variables.
The primary objective of a regression analysis
is to build a simple regression equation to

(a) Estimate the relationship that exists, on the


average, between the dependent variable and the
explanatory variables.
(b) Determine the effect of each of the explanatory
variables on the dependent variable, controlling the
effects of all other explanatory variables.
(c) Predict the value of the dependent variable for a
given value of the explanatory variables.
Given below are some situations where
regression analysis is appropriate:

(1) A company might wish to improve its


marketing process. After collecting data on the
demand for a product, the product price, and the
advertising expenditure incurred in promoting
the product, the company might use regression
analysis to develop an equation to predict the
future demand on the basis of price and
advertising.
(2) A real estate company fixes the selling price
of its apartments, as it claims, on the basis of size
of the apartments measured in terms of square
footage of living space. A sample of 20
apartments was chosen and the apartment owners
were asked to report the size of their apartments
and the price they paid. Given this information, a
regression analysis may be undertaken to see if
there is any basis of such claim of the company
and to make prediction of the price for a
specified floor space.
(3) From the knowledge of economics, it is known
that, other things remaining the same, the higher the
rate of inflation, the lower is the proportion of their
incomes that people would want to hold in the form
of money. A regression analysis of this relationship
will enable the economist to predict the amount of
money, as a proportion of their income that people
would want to hold at various rates of inflation.
(4) A physician collected blood sample from 50
infants on pulmonary blood flow (PBF) and
pulmonary blood volume (PBV) to examine if there
is any relationship between PBF and PBV. A linear
regression analysis seems appropriate for the
purpose to see if there is any such relationship.
Types of Regression Analysis:

Although infinitely many different statistical model can be


used to represent the mean value of the dependent
variable 𝑦 as a function of one or more explanatory
variables, we will concentrate on what we call linear
statistical models. If 𝑦 is a dependent variable and 𝑥 is a
single explanatory variable, it may be reasonable in some
situations to use the model 𝜇𝑦 𝑥 =∝ +𝛽𝑥 for unknown
parameters ∝ and 𝛽. If the model relates 𝜇𝑦 𝑥 as a
linear function of ∝ and 𝛽 only, the model is called a
simple linear regression model.
If more than one explanatory variable, say
𝑥1 , 𝑥2 , … … … , 𝑥𝑘 are of interest, and we model 𝜇𝑦 𝑥 by
𝜇𝑦 𝑥 =∝ +𝛽1 𝑥1 + 𝛽2 𝑥2 + … … … + 𝛽𝑘 𝑥𝑘 ,
The model is called a multiple linear regression model.
With one independent variable, it is frequently assumed
that the regression function is a polynomial in the
independent variable. This type of regression is known as
polynomial regression. In such cases, we model 𝜇𝑦 𝑥 by
𝜇𝑦 𝑥 =∝ +𝛽1 𝑥 + 𝛽2 𝑥 2
which is a second degree polynomial function of the
independent variable 𝑥 with 𝑥1 = 𝑥 and 𝑥2 = 𝑥 2 . This
model would be appropriate for a response that traces a
segment of a parabola over the experimental region.

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