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Simple Linear Regression

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Chirag Sachdeva
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32 views29 pages

Simple Linear Regression

Uploaded by

Chirag Sachdeva
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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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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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