Business Analytics

Class - 8
Date - 10th November, 2021
Lecturer - Debabrata Das
Email ID -
Book - Hastie, T., Tibshirani, R., & Friedman, J. (2009). The elements of statistical learning:
data mining, inference, and prediction. Springer Series in Statistics.
Sections - D
Batch - PGDIM
Software to be used - Anaconda

Female has lesser salary than male candidates

Males have more salary increment than females per year of work ex added
Variable introduced = Gender * Work ex
WE*Gender is the new interaction variable

This model is linear

Gender (M/F) is defined by 0/1
If we change female with 0 and male with 1,

The coefficients’ sign change

Final equation hasn’t changed

F statistic is for checking whether the model is significant or not

Since probability of F Statistic is very small, we would reject the null hypothesis
If we add more independent variables, SST won’t change, but SSE will reduce, as y-hat will be
better predicted, and will go closer to yi.
So, R square will increase.

SSE and SST will be divided by degrees of freedom