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more likely to occur with certain values of the other variable.

For higher levels of energy use, does the CO2 level in the atmosphere tend to be

higher? If so, then there is an association between energy use and CO2 level.

Correlation

The Pearson correlation coefficient, r, measures the strength and the direction of

a straight-line relationship.

straight line.

The direction is determined by whether one variable generally increases or

generally decreases when the other variable increases.

r is always between 1 and +1

magnitude indicates the strength

r = 1 or +1 indicates a perfect linear relationship

sign indicates the direction

r = 0 indicates no linear relationship

The following data were collected to study the relationship between the sale price, y

and the total appraised value, x, of a residential property located in an upscale

neighborhood.

Property x y x2 y2 xy

1 2 2 4 4 4

2 3 5 9 25 15

3 4 7 16 49 28

4 5 10 25 100 50

5 6 11 36 121 66

20 35 90 299 163

x y x2 y2 xy

n xy ( x)( y )

r

n( x ) ( x ) 2 n( y 2 ) ( y ) 2

2

Example Among all elementary school children, the relationship between the

number of cavities in a childs teeth and the size of his or her vocabulary is strong

and positive.

Regression

Weve seen how to explore the relationship between two quantitative variables

graphically with a scatterplot. When the relationship has a straight-line pattern, the

Pearson correlation coefficient describes it numerically. We can analyze the data

further by finding an equation for the straight line that best describes the pattern.

This equation predicts the value of the response(y) variable from the value of the

explanatory variable.

related. Saying that x and y are related in this manner means that once we are told

the value of x, the value of y is completely specified. For example, suppose the cost

for a small pizza at a restaurant if $10 plus $.75 per topping. If we let x= # toppings

and y = price of pizza, then y=10+.75x. If we order a 3-topping pizza, then

y=10+.75(3)=12.25

There are many variables x and y that would appear to be related to one another, but

not in a deterministic fashion. Suppose we examine the relationship between x=high

school GPA and Y=college GPA. The value of y cannot be determined just from

knowledge of x, and two different students could have the same x value but have

very different y values. Yet there is a tendency for those students who have high

(low) high school GPAs also to have high(low) college GPAs. Knowledge of a

students high school GPA should be quite helpful in enabling us to predict how that

person will do in college.

Regression analysis is the part of statistics that deals with investigation of the

relationship between two or more variables related in a nondeterministic fashion.

Historical Note: The statistical use of the word regression dates back to Francis

Galton, who studied heredity in the late 1800s. One of Galtons interests was

whether or not a mans height as an adult could be predicted by his parents heights.

He discovered that it could, but the relationship was such that very tall parents

tended to have children who were shorter than they were, and very short parents

tended to have children taller than themselves. He initially described this

phenomenon by saying that there was a reversion to mediocrity but later changed

to the terminology regression to mediocrity.

The least-squares line is the line that makes the sum of the squares of the vertical

distances of the data points from the line as small as possible.

Equation for Least Squares (Regression) Line

y

= o 1 x

1denotes the slope. The slope in the equation equals the amount that y

changes

when x increases by one unit.

n xy ( x )( y )

n x ( x)

1 2 2

0

denotes the y-intercept. The y-intercept is the predicted value of y when x=0.

The y-intercept may not have any interpretive value. If the answer to either of the

two questions below is no, we do not interpret the y-intercept.

2. Do any observations near x=0 exist in the data set?

0 y 1 x

14

12

10

SalePric

6 Y = -2.2 + 2.3X

R-Squared = 0.980

4

2 3 4 5 6

App val

y = -2.2 + 2.3x

Value, x $100,000

y (y -

y ) (y - )2

y

$100,000

2 2 2.4 -.4 .16

3 5 4.7 .3 .09

4 7 7 0 0

5 10 9.3 .7 .49

6 11 11.6 -.6 .36

(y - y )2 = 1.1

*******************************************************************

The method of least squares chooses the prediction line y = B o + B 1x that

minimizes the sum of the squared errors of prediction (y - y )2 for all sample

points.

*******************************************************************

When talking about regression equations, the following are terms used for x and y

x: predictor variable, explanatory variable, or independent variable

y: response variable or dependent variable

Extrapolation is the use of the least-squares line for prediction outside the range of

values of the explanatory variable x that you used to obtain the line. Extrapolation

should not be done!

explanatory and response variables, and the scatterplot indicates no relation at all

between the variables, then we use the mean value of the response variable as the

predicted value so that y = y .

We can consider how much the errors of prediction of y were reduced by using the

information provided by x.

2

2 2

(y - y) - (y - y)

r (Coefficient of Determination) = 2

(y - y)

The coefficient of determination can also be obtained by squaring the Pearson

correlation coefficient. This method works only for the linear regression model y

= x . The method does not work in general.

o 1

The coefficient of determination, r2, represents the proportion of the total sample

variation in y (measured by the sum of squares of deviations of the sample y values

about their mean y ) that is explained by (or attributed to) the linear relationship

between x and y.

Value, x y $100,000

$100,000

y y y

( y y )2 ( y y )2

2 2 2.4 -.4 .16 25

3 5 4.7 .3 .09 4

4 7 7 0 0 0

5 10 9.3 .7 .49 9

6 11 11.6 -.6 .36 16

1.1 54

2

2 2

(y - y) - (y - y) 54 1.1

r (Coefficient of Determination) = 2 = .98

(y - y) 54

line relationship between y and x, with the total sample variation in y being

measured by the sum of squares of deviations of the sample y values about their

mean y .

values about their predicted values has been reduced 98% by the use of the least

squares equation y = -2.2 + 2.3x, instead of y , to predict y.

0 r 2 1 If r2 = 0, the least squares regression line has no explanatory value. If r2 =

1, the least-squares regression line explains 100% of the variation in the response

variable.

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