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Simple Linear Regression

Linear regression determines the straight line equation that best fits a data set, where Y is the dependent variable and X is the independent variable. The slope (b) shows the degree of tilt and direction of the line, while the Y-intercept (a) shows where the line crosses the Y-axis. Regression can be used to model relationships between variables, estimate changes in dependents from independents, determine causes, and enable prediction and forecasting. It can handle both bivariate and multivariate data. Outliers more than 3 standard deviations from the mean may distort results.

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Dr. Sanjay Gupta
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80 views11 pages

Simple Linear Regression

Linear regression determines the straight line equation that best fits a data set, where Y is the dependent variable and X is the independent variable. The slope (b) shows the degree of tilt and direction of the line, while the Y-intercept (a) shows where the line crosses the Y-axis. Regression can be used to model relationships between variables, estimate changes in dependents from independents, determine causes, and enable prediction and forecasting. It can handle both bivariate and multivariate data. Outliers more than 3 standard deviations from the mean may distort results.

Uploaded by

Dr. Sanjay Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Introduction to simple linear

regression
Introduction to Linear Regression

• The Pearson correlation measures the degree


to which a set of data points form a straight
line relationship.
• Regression is a statistical procedure that
determines the equation for the straight line
that best fits a specific set of data.

2
Introduction to Linear Regression (cont.)

• Any straight line can be represented by an


equation of the form Y = bX + a, where b and a
are constants.
• The value of b is called the slope constant and
determines the direction and degree to which
the line is tilted.
• The value of a is called the Y-intercept and
determines the point where the line crosses
the Y-axis.

3
Regression model
• Relation between variables where changes in some
variables may “explain” or possibly “cause” changes
in other variables.
• Explanatory variables are termed the independent
variables and the variables to be explained are
termed the dependent variables.
• Regression model estimates the nature of the
relationship between the independent and
dependent variables.
– Change in dependent variables that results from changes
in independent variables, ie. size of the relationship.
– Strength of the relationship.
– Statistical significance of the relationship.
Examples
• Dependent variable is retail price of gasoline in Regina –
independent variable is the price of crude oil.
• Dependent variable is employment income – independent
variables might be hours of work, education, occupation, sex,
age, region, years of experience, unionization status, etc.

• Price of a product and quantity produced or sold:


– Quantity sold affected by price. Dependent variable is
quantity of product sold – independent variable is price.
– Price affected by quantity offered for sale. Dependent
variable is price – independent variable is quantity sold.
Bivariate and multivariate models
Bivariate or simple regression model

(Education) x y (Income)
Multivariate or multiple regression model
(Education) x1
(Gender) x2
y (Income)

(Experience) x3
(Age) x4
Model with simultaneous relationship
Price of wheat Quantity of wheat produced
Uses of regression
• Amount of change in a dependent variable that
results from changes in the independent variable(s) –
returns on investment in human capital, etc.
• Attempt to determine causes of phenomena.
• Prediction and forecasting of sales, economic
growth, etc.
Outliers
• Rare, extreme values may distort the
outcome.
– Could be an error.
– Could be a very important observation.
• Outlier: more than 3 standard deviations from
the mean.

9
.
Reference:
• Anonymous. (2018). “Introduction to Linear
Regression”.Available 2023-01-02 at
https://www.tutorialspoint.com/machine_lear
ning_with_python/machine_learning_with_py
thon_regression_algorithms_linear_regression
.htm
• Data Mining Concepts and Techniques, Third
Edition ,Jiawei Han, University of Illinois at
Urbana–Champaign , Micheline Kamber Jian
Pei Simon Fraser University

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