Announcements. Unit 6: Simple Linear Regression Lecture : Introduction to SLR. Poverty vs. HS graduate rate. Modeling numerical variables
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1 Announcements Announcements Unit : Simple Linear Regression Lecture : Introduction to SLR Statistics 1 Mine Çetinkaya-Rundel April 2, 2013 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Modeling numerical variables Modeling numerical variables So far we have worked with single numerical and categorical variables, and explored relationships between numerical and categorical, and two categorical variables. In this unit we will learn to quantify the relationship between two numerical variables, as well as modeling numerical response variables using a numerical or categorical explanatory variable. In the next unit we ll learn to model numerical variables using many explanatory variables at once. Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Modeling numerical variables Poverty vs. HS graduate rate The scatterplot below shows the relationship between HS graduate rate in all 50 US states and DC and the % of residents who live below the poverty line (income below $23,050 for a family of 4 in 20). 1 Response? Explanatory? Relationship? Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3
2 Correlation Quantifying the relationship Guessing the correlation Correlation Which of the following is the best guess for the correlation between % in poverty and? Correlation describes the strength of the linear association between two variables. It takes values between -1 (perfect negative) and +1 (perfect positive). A value of 0 indicates no linear association. (a) 0. (b) (c) -0.1 (d) 0.02 (e) Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, 2013 / 3 Guessing the correlation Correlation Which of the following is the best guess for the correlation between % in poverty and % HS female householder? Assessing the correlation Correlation Which of the following is has the strongest correlation, i.e. correlation coefficient closest to +1 or -1? (a) 0.1 (b) -0. (c) -0.4 (d) 0.9 (e) % female householder, no husband present (a) (c) (b) (d) Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, 2013 / 3
3 Residuals Residuals Residuals Residuals (cont.) Residuals are the leftovers from the model fit: Data = Fit + Residual 1 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Residual Residual is the difference between the observed and predicted y. 1 y^ y RI 4. y 5.44 e i = y i ŷ i y^ DC % living in poverty in DC is 5.44% more than predicted. % living in poverty in RI is 4.% less than predicted. Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, 2013 / 3 Best line Best line A measure for the best line We want a line that has small residuals: 1 Option 1: Minimize the sum of magnitudes (absolute values) of residuals e 1 + e e n 2 Option 2: Minimize the sum of squared residuals least squares Why least squares? e e e2 n 1 Most commonly used 2 Easier to compute by hand and using software 3 In many applications, a residual twice as large as another is more than twice as bad Notation: Intercept: ŷ = β 0 + β 1 x predicted y slope explanatory variable intercept Parameter: β 0 Point estimate: b 0 Slope: Parameter: β 1 Point estimate: b 1 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, 2013 / 3
4 Given... Slope Slope 1 (x) (y) mean x =.01 ȳ = sd s x = 3.73 s y = 3.1 correlation R = 0.75 The slope of the regression can be calculated as In context... b 1 = s y s x R b 1 = = Interpretation For each % point increase in HS graduate rate, we would expect the % living in poverty to decrease on average by 0.2% points. Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, 2013 / 3 Intercept Clicker Intercept The intercept is where the regression line intersects the y-axis. The calculation of the intercept uses the fact the a regression line always passes through ( x, ȳ). b 0 = ȳ b 1 x intercept b 0 = ( 0.2).01 = 4. Which of the following is the best interpretation of the intercept? (a) For each % point increase in HS graduate rate, % living in poverty is expected to increase on average by 4.%. (b) For each % point decrease in HS graduate rate, % living in poverty is expected to increase on average by 4.%. (c) Having no HS graduates leads to 4.% of residents living below the poverty line. (d) States with no HS graduates are expected on average to have 4.% of residents living below the poverty line. (e) In states with no HS graduates % living in poverty is expected to increase on average by 4.%. Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, 2013 / 3
5 Regression line Interpretation of slope and intercept Recap: Interpreting the slope and the intercept = Intercept: When x = 0, y is expected to equal the intercept. Slope: For each unit increase in x, y is expected to increase/decrease on average by the slope. Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Prediction Extrapolation Using the linear model to predict the value of the response variable for a given value of the explanatory variable is called prediction, simply by plugging in the value of x in the linear model equation. There will be some uncertainty associated with the predicted value - we ll talk about this next time Applying a model estimate to values outside of the realm of the original data is called extrapolation. Sometimes the intercept might be an extrapolation. intercept Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3
6 Examples of extrapolation Examples of extrapolation Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Examples of extrapolation 1 Linearity 2 Nearly normal residuals 3 Constant variability Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3
7 Conditions: (1) Linearity Anatomy of a residuals plot The relationship between the explanatory and the response variable should be linear. Methods for fitting a model to non-linear relationships exist, but are beyond the scope of this class. Check using a scatterplot of the data, or a residuals plot. 15 RI: = 1 =.3 % in poverty = =.4 e = % in poverty =.3.4 = 4. 5 DC: = =. % in poverty = = 11.3 e = % in poverty = = 5.44 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Conditions: (2) Nearly normal residuals Conditions: (3) Constant variability frequency The residuals should be nearly normal. This condition may not be satisfied when there are unusual observations that don t follow the trend of the rest of the data. Check using a histogram or normal probability plot of residuals. Sample Quantiles Normal Q Q Plot The variability of points around the least squares line should be roughly constant. This implies that the variability of residuals around the 0 line should be roughly constant as well. Also called homoscedasticity. Check using a residuals plot residuals Theoretical Quantiles 0 90 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3
8 Checking conditions Checking conditions What condition is this linear model obviously violating? What condition is this linear model obviously violating? y (a) Constant variability (b) Linear relationship (c) Non-normal residuals (d) No extreme outliers g$residuals (a) Constant variability (b) Linear relationship (c) Non-normal residuals (d) No extreme outliers g$residuals x Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 R 2 R 2 Interpretation of R 2 R 2 The strength of the fit of a linear model is most commonly evaluated using R 2. R 2 is calculated as the square of the correlation coefficient. It tells us what percent of variability in the response variable is explained by the model. The remainder of the variability is explained by variables not included in the model. For the model we ve been working with, R 2 = = 0.3. Which of the below is the correct interpretation of R = 0.2, R 2 = 0.3? (a) 3% of the variability in the % of HG graduates among the 51 states is explained by the model. (b) 3% of the variability in the % of residents living in poverty among the 51 states is explained by the model. (c) 3% of the time uates predict % living in poverty correctly. (d) 2% of the variability in the % of residents living in poverty among the 51 states is explained by the model. 1 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3
9 Categorical explanatory variables Categorical explanatory variables Poverty vs. region (east, west) Poverty vs. region (northeast, midwest, west, south) poverty = west Explanatory variable: region, reference level: east Intercept: The estimated average poverty percentage in eastern states is 11.17%/ This is the value we get if we plug in 0 for the explanatory variable Slope: The estimated average poverty percentage in western states is 0.3% higher than eastern states. Then, the estimated average poverty percentage in western states is = 11.55%. This is the value we get if we plug in 1 for the explanatory variable Which region (northeast, midwest, west, or south) is the reference level? (a) northeast (b) midwest (c) west (d) south (e) cannot tell Estimate Std. Error t value Pr(> t ) (Intercept) region4midwest region4west region4south Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3 Categorical explanatory variables Poverty vs. region (northeast, midwest, west, south) Which region (northeast, midwest, west, or south) has the lowest poverty percentage? (a) northeast (b) midwest (c) west (d) south (e) cannot tell Estimate Std. Error t value Pr(> t ) (Intercept) region4midwest region4west region4south Statistics 1 (Mine Çetinkaya-Rundel) U - L1: Introduction to SLR April 2, / 3
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