STA261 week 13.ppt

STA261 week 13 * Regression Models - Introduction In regression models there are two types of variables that are studied: A dependent variable, Y, also called response variable. It is modeled as random. An independent variable, X, also called predictor variable or explanatory variable. It is sometimes modeled as random and sometimes it has fixed value for each observation. In regression models we are fitting a statistical model to data. We generally use regression to be able to predict the value of one variable given the value of others. STA261 week 13 * Simple Linear Regression - Introduction Simple linear regression studies the relationship between a quantitative response variable Y, and a single explanatory variable X. Idea of statistical model: Actual observed value of Y = … Box (a well know statistician) claim: “All models are wrong, some are useful”. ‘Useful’ means that they describe the data well and can be used for predictions and inferences. Recall: parameters are constants in a statistical model which we usually don’t know but will use data to estimate. STA261 week 13 * Simple Linear Regression Models The statistical model for simple linear regression is a straight line model of the form where… For particular points, We expect that different values of X will produce different mean response. In particular we have that for each value of X, the possible values of Y follow a distribution whose mean is... Formally it means that …. STA261 week 13 * Estimation – Least Square Method Estimates of the unknown parameters β0 and β1 based on our observed data are usually denoted by b0 and b1. For each observed value xi of X the fitted value of Y is This is an equation of a straight line. The deviations from the line in vertical direction are the errors in prediction of Y and are called “residuals”. They are defined as The estimates b0 and b1 are found by the Method of