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6.1 Basics-of-Statistical-Modeling

Regression analysis is a statistical technique used to investigate and model relationships between variables. It allows one to predict the value of a dependent variable based on the value of one or more independent variables. The regression equation defines this relationship and can be used to estimate unknown values. Regression analysis outputs include coefficients, residuals, R-squared, and sums of squares which help evaluate model fit and predictiveness.

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35 views17 pages

6.1 Basics-of-Statistical-Modeling

Regression analysis is a statistical technique used to investigate and model relationships between variables. It allows one to predict the value of a dependent variable based on the value of one or more independent variables. The regression equation defines this relationship and can be used to estimate unknown values. Regression analysis outputs include coefficients, residuals, R-squared, and sums of squares which help evaluate model fit and predictiveness.

Uploaded by

Lady Jane Cagulada
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Basics of Statistical Modeling

Regression Analysis
Purposes of Regression Analysis
1.) To study and measure the statistical relationship that exist
between two or more variables.

2.) It is developed to describe the pattern or functional nature of


the relationship that exists between the variables.

3.) To predict the (mean) average value of the dependent variable


on the basis of the known or fixed values of the explanatory
variables.

4.) To make estimates of values of one variable from given values


of the others.

5.) Useful for social science research.


Regression Analysis
It is a predictive modeling
technique which investigate &
estimates the relationship between
the variables.
Dependent variable
is a value that is affected when the value of the independent variable changes.
Regressed/Response/Predicted/Explained variable – vertical Y axis

Independent variable
is a value that the researcher can freely change to test its effect on the
dependent variable.
Regressor/Predictor/Explanatory variable – horizontal X axis

Example:
Predict how much an individual enjoys his/her job.

Dependent variable:
job satisfaction

Independent variables:
Salary,
age,
no. of years,
socio-economic status
Types of Regression Analysis

• Simple Regression (single explanatory variable)

I • Multiple Regression (includes any number of explanatory variables)

• Linear Regression If the regression curve is a straight line then there is a


I • Non-linear/Curvilinear
linear regression between the variables.

I Regression If the regression curve is not a straight line then there is


non-linear regression between the variables.
Scatter Plots
Allows to identify the flow of the dots
To determine whether the two variables are related
Types of Lines
Regression Equation
Is a mathematical equation that
allows us to predict values of one
dependent variable from known
values of one or more independent
variables.
Regression Equation
The linear equation is specified as
follows:

Y = a + bX
Regression Equation
Standard Regression Equation/A Simple Regression
Model can be written as

Y = α + βX + ε

Value of Dependent variable = Constant + Slope × Value of


Indep. variable + Error

Regression analysis provides reasonable (statistically unbiased) values for


slope(s) and intercept.
Regression Equation
Y = α + βX + ε

Where
y–
is the value of the dependent variable (y),
what is being predicted or explained.

α–
a constant term,
equals the value of y when the value of x = 0.

β–
slope
is the regression coefficient of X,
tells how much Y changes if X changes by one unit.

x–
is the value of the independent variable (x),
what is predicting or explaining the value of y.

ɛ-
is the error term,
are unknown,
Multiple Regression Model

Y = a+b’x’+b2x2+bnxn+e

More than two variables in which one is dependent


and others are independent variables.
Regression Equation
Regression Coefficient
indicates the direction and strength of the
relationship between the two quantitative variables.
Regression Equation
Error (ε)
Represents the average distance that the observed values fall from
the regression line.
Regression Equation
Residual
Is the difference between the predicted value of Y and the
observed value of Y.
R-squared
Measures how close the data
are to the fitted regression
line.
Also known as the
coefficient of determination.
Two Component Parts of Total Variance

1.) Regression Sum of Squares


Difference between the mean and the predicted value of Y.
Explained part of the deviation.
A higher regression sum of squares describes that the model does not fit the observed data well.

2.) Residual Sum of squares


Measures the prediction errors.
Unexplained part of the deviation.
A lower residual sum of squares describes that the regression model can better explain the observed data while
a higher residual sum of squares describes that the model poorly explains the observed data.

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