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    Simple Linear Regression

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    Chirag Sachdeva

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    © All Rights Reserved
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    Simple Linear Regression

    Uploaded by

    Chirag Sachdeva
    20 views29 pages

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    Download as ppt, pdf, or txt
    20 views29 pages

    Simple Linear Regression

    Uploaded by

    Chirag Sachdeva

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 29

    SIMPLE LINEAR REGRESSION

    6-1 Introduction To Empirical Models


    6-1 Introduction To Empirical Models
    6-1 Introduction To Empirical Models
    6-1 Introduction To Empirical Models

    Based on the scatter diagram, it is probably reasonable to


    assume that the mean of the random variable Y is related to x by
    the following straight-line relationship:

    where the slope and intercept of the line are called regression
    coefficients.
    The simple linear regression model is given by

    where  is the random error term.


    6-1 Introduction To Empirical Models
    We think of the regression model as an empirical model.
    Suppose that the mean and variance of  are 0 and 2,
    respectively, then

    The variance of Y given x is


    6-1 Introduction To Empirical Models
    • The true regression model is a line of mean values:

    where 1 can be interpreted as the change in the


    mean of Y for a unit change in x.
    • Also, the variability of Y at a particular value of x
    is determined by the error variance, 2.
    • This implies there is a distribution of Y-values at
    each x and that the variance of this distribution is the
    same at each x.
    6-1 Introduction To Empirical Models
    6-1 Introduction To Empirical Models
    A Multiple Regression Model:
    6-1 Introduction To Empirical Models
    6-1 Introduction To Empirical Models
    6-2 Simple Linear Regression

    6-2.1 Least Squares Estimation


    • The case of simple linear regression considers a
    single regressor or predictor x and a dependent or
    response variable Y.
    • The expected value of Y at each level of x is a random
    variable:

    • We assume that each observation, Y, can be described


    by the model
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    • Suppose that we have n pairs of observations (x1, y1),
    (x2, y2), …, (xn, yn).
    •The method of least squares is used to estimate the
    parameters, 0 and 1 by minimizing the sum of the
    squares of the vertical deviations in Figure 6-6.
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    • Using Equation 6-8, the n observations in the sample
    can be expressed as

    • The sum of the squares of the deviations of the


    observations from the true regression line is
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation

    Notation
    2
      n

    n n
      xi 
     i 1 
    S xx   ( xi  x)   xi 
    2 2

    i 1 i 1 n

     n  n 
    n n
      x i   y i 
     i 1  i 1 
    S xy   ( x i  x )( y i  y )   x i y i 
    i 1 i 1 n
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    6-2 Simple Linear Regression
    6-2.1 Least Squares Estimation
    6-2 Simple Linear Regression
    Regression Assumptions and Model Properties
    6-2 Simple Linear Regression

    Regression Assumptions and Model Properties


    6-2 Simple Linear Regression

    Regression and Analysis of Variance


    6-2 Simple Linear Regression

    Regression and Analysis of Variance

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