Chapter 8, Part 4

Linear Regression October 23, 2013

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DO NOW PICK 2
1) What is the formula for b1? 2) What is the formula for b0? 3) What is the three conditions that you need to check for regression?

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AIM AND HOMEWORK

How do we plot and understand linear regressions? Homework 18: Read and Complete Chapter 8 (Page 192-199), #41-49 ODD, 42 Check Homework 17 with classmates Quiz 6 online due Sunday!!!

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INDEPENDENT PRACTICE SHOW WORK!

A linear model for Saratoga homes uses the size (in thousands of square feet) to estimate the price (in thousands of dollars): Predicted price: = -3.117 + 94.454Size. Suppose youre thinking of buying a home there. 1) Would you prefer to buy a home with a negative or positive residual? 2) You plan to look for a home of about 3000 square feet. How much would you expect to pay? 3) You find a nice home that size that is selling for $300,000. Whats the residual?
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INDEPENDENT PRACTICE ANSWERS

1)

2) 3)

Negative, that indicates that its priced lower than a typical home of its size. $280,000 $19,755 (positive)

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The Residual Standard Deviation

The standard deviation of the residuals, se, measures how much the points spread around the regression line. Check to make sure the residual plot has about the same amount of scatter throughout. Check the Equal Variance Assumption with the Does the Plot Thicken? Condition. We estimate the SD of the residuals using:

se =
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n-2
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The Residual Standard Deviation

We dont need to subtract the mean because the mean of the residuals e = 0. Make a histogram or normal probability plot of the residuals. It should look unimodal and roughly symmetric. Then we can apply the 68-95-99.7 Rule to see how well the regression model describes the data.

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R2The Variation Accounted For

The variation in the residuals is the key to assessing how well the model fits. In the BK menu items example, total fat has a standard deviation of 16.4 grams. The standard deviation of the residuals is 9.2 grams.

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R2The Variation Accounted For (cont.)

If the correlation were 1.0 and the model predicted the fat values perfectly, the residuals would all be zero and have no variation. As it is, the correlation is 0.83not perfection. However, we did see that the model residuals had less variation than total fat alone. We can determine how much of the variation is accounted for by the model and how much is left in the residuals.

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R2The Variation Accounted For (cont.)

The squared correlation, r2, gives the fraction of the datas variance accounted for by the model. Thus, 1 r2 is the fraction of the original variance left in the residuals. For the BK model, r2 = 0.832 = 0.69, so 31% of the variability in total fat has been left in the residuals.

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R2The Variation Accounted For (cont.)

All regression analyses include this statistic, although by tradition, it is written R2 (pronounced R-squared). An R2 of 0 means that none of the variance in the data is in the model; all of it is still in the residuals. When interpreting a regression model you need to Tell what R2 means. In the BK example, 69% of the variation in total fat is accounted for by variation in the protein content.
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INDEPENDENT PRACTICE

Our regression model that predicts maximum wind speed in hurricanes based on the storms central pressure has R^2 = 77.3%. Question: What does it say about the regression model? An R^2 of 77.3% indicates that 77.3% of the variation in the maximum wind speed can be accounted by the hurricanes central pressure. Other factors, such as temperature and whether the storm in over water or land, may explain some of the remaining variation.
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How Big Should R Be?

R2 is always between 0% and 100%. What makes a good R2 value depends on the kind of data you are analyzing and on what you want to do with it. The standard deviation of the residuals can give us more information about the usefulness of the regression by telling us how much scatter there is around the line.

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Reporting R

Along with the slope and intercept for a regression, you should always report R2 so that readers can judge for themselves how successful the regression is at fitting the data. Statistics is about variation, and R2 measures the success of the regression model in terms of the fraction of the variation of y accounted for by the regression.

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CONCLUSION

What did we learn today?

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