# 1.) An Overview of Regression Analysis Flashcards

β0

is the constant or intercept term; it indicates the value of Y when x equals 0

β1

is the slope coefficient; and it indicates the amount that Y will change when X increases by one unit

an equation is linear if …

plotting the function in terms of X and Y generates a straight line

A stochastic error term is a term that is added to a regression to…

introduce all of the variation in Y that cannot be explained by the included X’s

Unexplained variation probably comes from…

sources such as omitted influences, measurement error, incorrect functional form, or purely random and totally unpredictable occurrences

By random the textbook authors mean…

something that has its value determined solely by chance.

Four possible sources of variation that require stochastic error term

- ) Many minor influences on Y are omitted form the equation
- ) It is virtually impossible to avoid some sort of measurement error in the dependent variable
- ) The underlying theoretical equation might have a different functional for (or shape) than the one chosen for the regression.
- ) Al attempts to generalize human behavior must contain at least some amount of unpredictable or purely random variation.

What is the deterministic component of the regression expression?

B0 + B1*X

What changes from observation to observation?

The coefficients do not change from observation to observation, but the values of Y,X, and e do.

Multivariate regression coefficients…

serve to isolate the impact on Y of a change in one variable from the impact on Y of changes in the other variables

The ability of regression analysis to measure the impact of one variable on the dependent variable, holding…

constant the influence of the other variables in the equation, is a tremendous advantage.

when is a dummy variably useful?

when we want to quantify a concept that is inherently qualitative (like gender)

The estimated regression coefficients are..

empirical best guesses of the true regression coefficients and are obtained from data from a sample of Ys and Xs

Estimated coefficients are used..

to determine Y hats, the estimated or fitted value of Y

“Y hat i “is…

the estimated value of an observed Y, and it represents the value of Y calculated form the estimated regression equation for the ith observation.