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Chap 011

# Chap 011

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11/12/2011

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Independent Variables (in Regression)

EXAMPLE 11-3

EXAMPLE 11-3

11-33

A multiple regression with two
quantitative variables (X1and X2)
and one qualitative variable (X3):

A multiple regression with two
quantitative variables (X1and X2)
and one qualitative variable (X3):

A regression with one
quantitative variable (X1) and
one qualitative variable (X2):

A regression with one
quantitative variable (X1) and
one qualitative variable (X2):

X1

Y

Line for X2=1

Line for X2=0

b0

b0+b2

x2

x1

y

b3

ybbxbx

= + +

0

11

2

2

ybbxbxbx

= + + +

0

11

2

2

33

Picturing Qualitative Variables in

Picturing Qualitative Variables in
Regression

Regression

11-34

b0

X1

Y

Line for X = 0 and X3= 1

A regression with one quantitative variable (X1) and two
qualitative variables (X2 and X2):

A regression with one quantitative variable (X1) and two
qualitative variables (X2 and X2):

b0+b2

b0+b3

Line for X2= 1 and X3= 0

Line for X2= 0 and X3= 0

A qualitative
variable with r
levels or categories
is represented with
(r-1) 0/1 (dummy)
variables.

A qualitative
variable with r
levels or categories
is represented with
(r-1) 0/1 (dummy)
variables.

Category X2 X3

Drama 0 1
Romance 1 0

Category X2 X3

Drama 0 1
Romance 1 0

ybbxbxbx

= + + +

0

11

2

2

33

Picturing Qualitative Variables in Regression:

Picturing Qualitative Variables in Regression:
Three Categories and Two Dummy Variables

Three Categories and Two Dummy Variables

11-35

Salary = 8547 + 949 Education + 1258 Experience -
3256 Gender
(SE) (32.6) (45.1) (78.5)

(212.4)

(t) (262.2) (21.0) (16.0)

(-15.3)

Salary = 8547 + 949 Education + 1258 Experience -
3256 Gender
(SE) (32.6) (45.1) (78.5)

(212.4)

(t) (262.2) (21.0) (16.0)

(-15.3)

On average, female salaries are
\$3256 below male salaries

On average, female salaries are
\$3256 below male salaries

Gender

ifFemale
ifMale

=

1
0

Using Qualitative Variables in

Using Qualitative Variables in
Regression: Example 11-4

Regression: Example 11-4

11-36

A regression with interaction between a quantitative
variable (X1) and a qualitative variable (X2 ):

A regression with interaction between a quantitative
variable (X1) and a qualitative variable (X2 ):

X1

Y

Line for X2=0

b0+b2

b0

Line for X2=1

Slope = b1

Slope = b1+b3

ybbxbxbxx

= + + +

0

11

2

2

312

Interactions between Quantitative and

Interactions between Quantitative and
Qualitative Variables: Shifting Slopes

Qualitative Variables: Shifting Slopes

11-37

One-variable polynomial regression model:

Y= β0+β1 X + β2X2

+ β3X3

+. . . + βmXm

+ε

where m is the degree of the polynomial - the highest power of X appearing in
the equation. The degree of the polynomial is the order

order of the model.

X1

Y

X1

Y

ybbX

= +

0

1

(

)

ybbXbX
b

= + +
<

0

1

2

2

2

0

ybbX

= +

0

1

ybbXbX

bX

= + + +

0

1

2

2

3

3

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