Regression Analysis

This concept was first used by Sir Franci Galton in 1877 while studying the
relationship between the height of fathers and sons.
In general terms, regression is concerned with describing and evaluating the
relationship between a given variable and one or more other variables.
More specifically, it is an attempt to explain movement in a variable by
reference to movements in one or more variables.
The statistical technique that express the relationship between two or more
variables in the form of an equation to estimate the value of a variable, based on
the given value of another variable is called regression analysis
The variable whose value is to be estimated is called dependent ( or response)
variable and the variable whose value is used to estimate this is called
independent ( regressor or predictor) variable.
The linear algebraic equation used for expressing a dependent variable in terms
of independent variable is called linear regression equation.
 Regression Coefficients
To estimate values of population parameter under certain
assumptions, the fitted regression equation representing the
straight line regression model is written as
Regression equation Y on X: Y= a + bX

Methods to determine Regression Coefficients

Least Squares Normal Equations
Normal equations with respect to the regression equation Y on X:

Yc  a  bX
The values of constants a and b are determined by solving the following normal equations

Y  N a  b  X
 XY  a  X  b  X 2
• Deviations taken from Actual mean
• Regression equation Y on X:
y
Y Y  r
x
 X X 
x
X X r
y
 Y Y 
 Example

Advertisement Expd. (X)Rs Sales (Y)Rs

78 125
89 137
97 156
69 112
59 107
79 136
68 124
61 108

ΣX=600 ΣY=1005
 XY X2 Y2 Yc (Y- Yc)2

9750 6084 15625 129.276 18.29

12193 7921 18769 142.608 31.45

15132 9409 24336 152.304 13.66

7728 4761 12544 118.368 40.55

6313 3481 11449 106.248 0.566

10744 6241 18496 130.488 30.38

8432 4624 15376 117.156 46.84

6588 3721 11664 108.672 0.452

1005.12 ∑ (Y- Yc)2

ΣXY=76880 ΣX2=46242 ΣY2=128259 =182.19
 Results
• So the regression equation Y on X is
• Y = 34.74+1.212 X
• In a similar manner we can find out the regression
equation X on Y is
• X = 19.26 + 0.75 Y
• S.E = ∑ (Y- Yc)2 /N = 4.77
• T-statistics= Coefficient of the independent variable
/ S.E
• = 1.212/ 4.77 = 3.93
 Standard Error of the Estimate
• A measure of the precision of the estimates so
obtained from the regression equations is provided
by the Standard error (S.E.) of the estimate gives us a
measure of the scatter of the observations about the
line of regression.

 Y  Y 
2

S yx  c

N
 Example

Advertisement Expd. (X)Rs Sales (Y)Rs

10 14
12 17
15 23
23 25
20 21