Lecture 8
Lecture 8
Regression Statistics
R-Square 0.43
Adjusted R Square 0.43
Coeff S.E t P-value Lower 95% Upper 95%
Intercept 0.59 0.112 5.34 0.000 0.37 0.82
Pop dens 0.0008 0.0001 7.23 0.000 0.0006 0.001
Confidence intervals
• Confidence intervals provide interval estimates
• We are 95% confident that is greater than 0.0006 and less than 0.001. This
indicates that the marginal effect on deforestation is greater than 0.0006 and
less than 0.001.
• The more confident you wish to be about an interval the wider it becomes
so 99% confident intervals will always be wide than 95% confidence intervals.
Regression Statistics
R-Square 0.43
Adjusted R Square 0.43
Coeff S.E t P-value Lower 95% Upper 95%
Intercept 0.59 0.112 5.34 0.000 0.37 0.82
Pop dens 0.0008 0.0001 7.23 0.000 0.0006 0.001
Hypothesis testing
Regression Statistics
R-Square 0.43
Adjusted R Square 0.43
Coeff S.E t P-value Lower 95% Upper 95%
Intercept 0.59 0.112 5.34 0.000 0.37 0.82
Pop dens 0.0008 0.0001 7.23 0.000 0.0006 0.001
Hypothesis testing
Hypothesis testing
Regression Statistics
R-Square 0.43
Adjusted R Square 0.43
Coeff S.E t P-value Lower 95% Upper 95%
Intercept 0.59 0.112 5.34 0.000 0.37 0.82
Pop dens 0.0008 0.0001 7.23 0.000 0.0006 0.001
Multiple regression model
Explaining house prices
Multicollinearity
• Problem that arises if some or all the explanatory variables are highly correlated
with one another
Omitted variables bias
• Problem that arises if some or all the explanatory variables are highly correlated
with one another
Sale price Lot size Number of bedrooms Number of baths Number of stories
Sale price 1.0000
Lot size 0.5358 1.0000
Number of bedrooms 0.3664 0.1519 1.0000
Number of baths 0.5167 0.1938 0.3738 1.0000
Number of stories 0.4212 0.0837 0.4080 0.3241 1.0000