Research Methods &

Designs
RMD211
REGRESSION ANALYSIS

BY: ENGR. RACHEL ANN QUITANEG-ACENAS

REGRESSION ANALYSIS
•Regression analysis is the workhorse of econometrics
(or any quantitative analysis using multivariate data)

•Regression analysis is concerned with the study of the

dependency of one variable, called the dependent
variable, on one or more other variables, called the
explanatory variables

•The main objective of regression analysis is to extract

causal relationship between the explanatory and
dependent variables
TYPES OF VARIABLES

A. Dependent Variable
• also known as endogenous or response variable;
variability is explained by the system

B. Explanatory Variables
• also known as explanatory, predictor or regressor
variable; affect the dependent variable
SIMPLE LINEAR REGRESSION MODEL

The formal statement of the simple linear regression model is,

• is the dependent variable

• is the value of the explanatory variable
• (intercept) and (slope) are the parameters (called coefficients)
of the model
• is the random error term, representing factors, other than ,
that affect
SIMPLE LINEAR REGRESSION MODEL
Some remarks on the SLRM:
 
• A simple regression analysis effectively treats all factors
affecting , other than and , as being unobserved

• , , and are unobserved quantities

• Since and are assumed identical across observations, we

can hope to accumulate information about them
(estimate parameters from a dataset)
SIMPLE LINEAR REGRESSION MODEL

Some remarks on the SLRM:

 
• The observed value of Y in the obs, , is the sum of
two components: the population regression function
and a random variable, i.e.,

= {population regression function} + random error

SIMPLE LINEAR REGRESSION MODEL
Assumptions of the Regression Model

1. The conditional distribution of given , has a mean

zero, or ; the assumption implies that the “other
factors” contained in ­are uncorrelated with

2. are independently and identically distributed; the

implication is that error components of any pair of
observations, say the and the , are independent (no
serial correlation assumption)
SIMPLE LINEAR REGRESSION MODEL

Assumptions of the Regression Model

 
3. Large outliers are unlikely

4. The error term is homoskedastic or the variance

of the conditional distribution of given , is
constant for all i.e.,
SIMPLE LINEAR REGRESSION MODEL

Assumptions of the Regression Model

 
5. The regression equation: is the correct functional
form

6. The error term, , is normally distributed, i.e.,

THE REGRESSION COEFFICIENTS

The two parameters 0 and 1 in the simple linear

regression model are called regression coefficients
• is called the Y-intercept: the value of the mean of
when

• is called the slope of the regression line: its value gives

the change (either positive or negative) in the mean of
the response variable Y when there is a unit increase in
the value of the regressor variable
What is the meaning of Linear Model?

• When we say that a model is linear or non-linear,

we are referring to linearity or non-linearity in the
parameters
• Examples:
i. (linear in parameters)
ii. (nonlinear in parameters)
MULTIPLE REGRESSION ANALYSIS
Multiple regression analysis is used to see if there is a 
statistically significant relationship between sets of variables.
It’s used to find trends in those sets of data.

Multiple regression analysis is almost the same as 

simple linear regression. The only difference between simple
linear regression and multiple regression is in the number of 
predictors (“x” variables) used in the regression.

Simple regression analysis uses a single x variable for each

dependent “y” variable. For example: (x1, Y1).

Multiple regression uses multiple “x” variables for each 

independent variable: (x1)1, (x2)1, (x3)1, Y1).
LET’S HAVE AN EXAMPLE!
A teacher wants to know whether the typing speed
of a Computer Science student (in words per minute)
is related to the time (in hours). Given the speed of a
students (x) and the corresponding time it will take
to learn the word processing program, predict the
time it will take the average student who has a typing
speed of 72 words per minute to learn the word-
processing program.
SPEED(X) 45 68 69 45 58 55
TIME (Y) 85 67 56 78 68 89

SPEED (X) TIME (Y) XY

45 85
68 67
69 56
45 78
58 68
55 89
FORMULA

𝑎 =¿ ¿
𝑏= 𝑁 ¿ ¿
QUESTIONS

1. How long will it take a student who has a typing speed of 64 words per
minute to learn the word-processing program?

2. How fast should a student be in typing words in order to learn the word-
processing program in just 50 minutes?
End of Presentation
THANK YOU