EXAMPLE FOR MULTIPLE REGRESSION

The following is the outputs of a statistical program to analyze the data sample of 25 families to
study the relationship between monthly expenditure of households in thousand pounds (Y), and
each of its monthly income in thousand pounds (X1) and ,the number of family members (X2),
and the age of family’s head (X3)

Predictor Coef. SE of coef. T (calculated) p- value

Constant 2.5 0.47 5.32 0.0018
Income 0.8 0.07 11.43 0.000
No. of Family’s 1.7 0.16 10.63 0.000
members
Age of family’s -0.12 0.105 -1.14 0.13
head

The analysis of Variance Table (ANOVA)

Source Sum of Squares (SS) DF Mean Squares (MS) F(calculated) p-value

Regression 2039.6 ? ? ? 0.000

Residual (Error) ? ? ?
Total 2259.85 ?

1- Complete the missing values.

2- Write the estimated multiple regression model and interpret the meaning of each value of
partial regression coefficients..
3- Estimate the value of monthly expenditure if monthly income equal 6 thousand pounds,
No. of Family’s members equal 5 persons and the Age of family’s head equal 50 years.
4- Use significance level 0.05 to test the hypothesis that there is a significant regression
relation between the monthly expenditure and the independent variables (predictors). And
repeat the test by using use p- value from the above ANOVA table . F( 0.05, 3, 21) = 3.07
5- From the above table of coefficients test the regression coefficients individually by using p-
value and at significance level 0.05. (𝒕𝟎.𝟎𝟐𝟓 𝟐𝟏 = 𝟐. 𝟎𝟖)

ANSWER

Before solving the question we note that the sample size n = 25 , the dependent variable is monthly
expenditure ( Y ) and there are 3 independents variables ( predictors) monthly income X1, No. of
Family’s members X2 and Age of family’s head X3.

1- To complete the missing value in ANOVA TABLE:

SS for for error = total ss – ss regression = 2259.85 – 2039..6 = 220.25

Df regression = No. of independent variables = 3

Df for total = n – 1 = 25 – 1 = 24 , df for Error = 24 – 3 = 21

MS for regression = ss regression / df = 2039.6 / 3 = 679.87

MS for error = ss error / df = 220.25 / 21 = 10.49

F (calculated) = MS Regression / MS Error = 679.87 / 10.49 = 64.81

And the ANOVA TABLE after completing missing values is,

The analysis of Variance Table (ANOVA)

Source Sum of Squares (SS) DF Mean Squares (MS) F(calculated) p-value

Regression 2039.6 3 679.87 64.81 0.000

Residual (Error) 220.25 21 10.49
Total 2259.85 24

1- From the first table of coefficients we find that a ( constant) = 2.5 , b1 (coef. of X1 ) =
0.8 , b2 (coef. of X2 ) = 1.7 and b3 (coef. of X3 ) = - 0.12
The eistimated regression model is:
𝑌̂ = 2.5 + 0.8 𝑋1 + 1.7 𝑋2 − 0.12 𝑋3
** Meaning of the partial regression coefficients:
• b1 = 0.8 means that the relation beween Y and X1 is direct, and if X1 ( the monthly
income increase one thousand pounds the monthly expenditure will increase 0.8
thousand pounds i.e 800 pounds when X2 and X3 are fixed.
• b2 = 1.7 means the relation beween Y and X2 is direct, and that if X2 (No. of
Family’s members) increase one person the monthly expenditure will increase 1.7
thousand pounds i.e 1700 pounds when X1 and X3 are fixed.
• b3 = - 0.12 means that the relation beween Y and X3 is inverse, and means that if
X3 (Age of family’s head) increase one year, the monthly expenditure will decrease
0.12 thousand pounds i.e 120 pounds when X1 and X2 are fixed.
2- If X1 = 6 thousand pounds , X2 = 5 person and X3 = 50 years
𝑌̂ = 2.5 + 0.8 (6) + 1.7 (5) – 0.12 (50) = 9.8 thousand pounds (9800 pounds)
3- Ho: the regression relation between Y (monthly expenditure) and the independent
variables is not significant. : B1 = B2 = B3 = 0
H1 : The regression relation between Y (monthly expenditure) and the independent
variables is significant. At least one of bbbbbbbb’s not equal zero
From ANOVA table F ( calculated) = 64.81 more than tabulated value F( 0.05, 3, 21) =
3.07 and it lies at H1 region then we reject Ho and accept H1 i.e we conclude that
 The regression relation between Y (monthly expenditure) and the independent
variables is significant.
** By using p-value, from ANOVA table, we note that p-value = 0, which is less than α=
0.05 and we reject Ho and accept H1.
4- From the first table of coefficients we note that:
* By usining p- value to test the Y and each of the independent variables :
1) For testing X1, Ho : B1 = 0 versus H1 B1 ≠ 0, p- value = 0.00 less than α/2 = .025
then we reject Ho, i.e there is a signficant relation between Y and X1.

2) Ho : B2 = 0 versus B2 ≠ 0, p- value = 0.00 less than α/2 = .025, then we reject Ho, i.e
ther is a signficant relation between Y and X2

3) Ho : B3 = 0 versus B3 ≠ 0, p- value = 0.13 more than α/2 = .025 then we reject H1

and accept or don’t reject Ho, i.e the relation between Y and X3 is not significant.

*** by using T (calculated) from first table of coefficients we compare its values with t
tabulated value (𝒕𝟎.𝟎𝟐𝟓 𝟐𝟏 = 𝟐. 𝟎𝟖) we cocclude that:
• For testing X1: Ho : B1 = 0 versus H1: B1 ≠ 0, T (calculated) = 11.43 more than
(𝒕𝟎.𝟎𝟐𝟓 𝟐𝟏 = 𝟐. 𝟎𝟖) , and it lies at H1 region, then we reject Ho, i.e there is a siginficant
relation between Y and X1.
• For testing X2 Ho : B2 = 0 versus H1: B2 ≠ 0, T (calculated) = 10.93 more than
(𝒕𝟎.𝟎𝟐𝟓 𝟐𝟏 = 𝟐. 𝟎𝟖) , and it lies at H1 region, then we reject Ho, i.e there is a siginficant
relation between Y and X1.
• For testing X3: Ho : B3 = 0 versus H1 B3 ≠ 0, T (calculated) = - 1.14 more than
(𝒕𝟎.𝟎𝟐𝟓 𝟐𝟏 = − 𝟐. 𝟎𝟖) , and it lies at Ho region, then we don’t reject Ho, i.e ther is no
signficant relation between Y and X3.