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Regression

1. Regression analysis was used to predict the value of a dependent variable (number of tourists) based on independent variables (price, promotion spending, exchange rate, and temperature). 2. The coefficient of determination (R^2) was 0.974, meaning that 97.4% of the variation in tourist arrivals can be explained by the four independent variables. 3. To predict tourist arrivals given: price = 38, promotion spending = 12, exchange rate = 0.54, and temperature = 15.5. 4. Only price was found to be statistically significant at predicting tourist arrivals at the 0.05 level.

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Sophia Rusli
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53 views

Regression

1. Regression analysis was used to predict the value of a dependent variable (number of tourists) based on independent variables (price, promotion spending, exchange rate, and temperature). 2. The coefficient of determination (R^2) was 0.974, meaning that 97.4% of the variation in tourist arrivals can be explained by the four independent variables. 3. To predict tourist arrivals given: price = 38, promotion spending = 12, exchange rate = 0.54, and temperature = 15.5. 4. Only price was found to be statistically significant at predicting tourist arrivals at the 0.05 level.

Uploaded by

Sophia Rusli
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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REGRESSION ANALISYS

Introduction
•Regression is a statistical technique that can
be used to obtain the equation relating to
the two variables

•…estimation of the linear relationship


between a dependent variable and one or
more independent variables or covariates.
Purpose
• The purpose of multiple regression is to analyze the relationship
between metric or dichotomous independent variables and a metric
dependent variable.
• If there is a relationship, using the information in the independent
variables will improve our accuracy in predicting values for the
dependent variable.
• Standard multiple regression is used to evaluate the relationships
between a set of independent variables and a dependent variable.
Regression
• Regression analysis is used to:
– Predict the value of a dependent variable based on the value of
at least one independent variable
– Explain the impact of changes in an independent variable on
the dependent variable
Dependent variable: the variable we wish to explain
Independent variable: the variable used to explain the dependent
variable
Estimated Regression Model
The sample regression line provides an estimate of the
population regression line

Estimated (or Estimate of the Estimate of the


predicted) y regression regression slope
value intercept

Independent

ŷ i  a  b1x variable

The individual random error terms ei have a mean of zero


The Least Squares Equation
• The formulas for a and b are:

 xy   x y
b1 
 ( x  x )( y  y )
b  n

or
 (x  x) 2 2
( x )
 x 2

n
algebraic equivalent:

a
 y x
 b  or a  y  bx
n  n 
 
Interpretation of the
Slope and the Intercept

• a is the estimated average value of y


when the value of x is zero

• b is the estimated change in the


average value of y as a result of a one-
unit change in x
Coefficient of Determination, R 2

• The coefficient of determination is the portion of


the total variation in the dependent variable that
is explained by variation in the independent
variable

• The coefficient of determination is also called R-


squared and is denoted as R2
SSR
R 2
where 0  R 1
2

SST
Coefficient of Determination, R 2
(continued)
Coefficient of determination
explained variation
R 
2

total variation

** The term R2 is expressed as a percentage


Note: In the single independent variable case, the coefficient of
determination is

R r 2 2
where:
R2 = Coefficient of determination
r = Simple correlation coefficient
Examples of Approximate
R2 Values
y
R2 = 1

Perfect linear relationship


between x and y:
x
R2 = 1
y 100% of the variation in y is
explained by variation in x

x
R2 = +1
Examples of Approximate
R2 Values
y
0 < R2 < 1

Weaker linear relationship


between x and y:
x
Some but not all of the
y
variation in y is explained by
variation in x

x
Examples of Approximate
R2 Values

R2 = 0
y
No linear relationship between
x and y:

The value of Y does not depend


x on x. (None of the variation in
R2 = 0
y is explained by variation in x)
* * * * M U L T I P L E R E G R E S S I O N * * * *
Listwise Deletion of Missing Data

Equation Number 1
Dependent Variable.. TOURISTS BILANGAN PELANCONG YANG TIBA (DALAM
RIBU)

Block Number 1. Method: Enter PRICE PROMOTE RATE TEMP

Variable(s) Entered on Step Number

1.. TEMP MIN SUHU PADA SESUATU MINGGU (DALAM 0C)


2.. RATE KADAR PERTUKARAN
3.. PRICE HARGA YANG DIKENAKAN
4.. PROMOTE PERBELANJAAN UNTUK PROMOSI (DALAM RIBU RINGGIT)

Multiple R .98703
R Square .97423
Adjusted R Square .95951
Standard Error .21060

Analysis of Variance

DF Sum of Squares Mean Square

Regression 4 11.73870 2.93468


Residual 7 .31046 .04435

F = 66.16804 Signif F = .0000

------------------ Variables in the Equation ------------------

Variable B SE B Beta T Sig T

PRICE -.170851 .043016 -.615248 -3.972 .0054


PROMOTE .242553 .162832 .258911 1.490 .1799
RATE 3.546983 3.035765 .091918 1.168 .2809
TEMP .227316 .118947 .175505 1.911 .0976
(Constant) 5.918755 3.892175 1.521 .1721
1. Form an appropriate multiple regression equation.
2. What is the percentage of variation in the number of tourists
arriving which can be explained by four variables. Interpret.
3. Predict the level of tourist arrivals should be given
PRICE = 38
PROMOTE = 12
RATE = 0.54
TEMP = 15.5
4. At the 0.05 level of significance, which is the significance factor
• THANK YOU

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