Professor Schneider PLS 802

324B S. Kedzie Hall Spring 2009

sks@msu.edu
517/355-7682

REGRESSION ANALYSIS
This course provides an introduction to the theory, methods, and practice of regression analysis.
The goals are to provide students with the skills that are necessary to: (1) read, understand, and
evaluate the professional literature that uses regression analysis; (2) design and carry out studies
that employ regression techniques for testing substantive theories; and (3) prepare to learn about
more advanced statistical procedures.
The course will not dwell on statistical theory, but it will also not take a superficial approach.
Instead, it will focus on: The utility of regression analysis for evaluating empirical relationships
between variables as a critical component of the theory-testing process. We will thoroughly
cover the basic elements of the regression model and the development of the regression
estimators. We will see that this model depends very heavily on several assumptions. Therefore,
we will examine these assumptions in detail, considering why they are necessary, whether they
are valid in practical research situations, and the consequences of violating them in particular
applications of the regression techniques. These formal, analytic treatments will be
counterbalanced by the use of frequent substantive examples and class exercises. Again, the
overall course objective is not to turn you into a statistician– instead, the aim is to maximize
your research skills as a political scientist.
Course Prerequisites: Any course of this type must assume a working knowledge of
elementary statistical concepts and techniques. We will conduct a brief review at the beginning
of the course, but students must be familiar with such ideas as descriptive statistics, sampling
distributions, statistical inference, confidence intervals, and hypothesis testing, before moving on
to the more complicated matters that will comprise the majority of the course material. You must
have completed at least one prior course in introductory statistics course– i.e., PLS 801 or the
equivalent.
Course Requirements: Formal course requirements are as follows: (1) Class attendance and
active participation. This is mandatory. Statistical knowledge is cumulative, and gaps in the
material will have detrimental consequences. (2) Completion of homework assignments. Most of
these are computer-based data analysis exercises, designed to familiarize you with the
application of various concepts and techniques. Each of these assignments will focus on a
specific set of topics. However, the latter assignments are cumulative in the sense that they build
upon earlier material in the class. Homework assignments will be given frequently (about once a
week or so). They will not be assigned grades, but they will be checked for completion and
comments will be provided to make sure that you fully understand the material. (3) Two
examinations. A midterm exam will be given in class on Tuesday, March 3; the final will be a
take-home exam, due on Tuesday, May 5, 2009, at 5:00 p.m. (4) Regression Analysis Paper. For
this paper, you are expected to use regression analysis to examine a political science research
question. You should identify a suitable topic and focus for the paper by Friday, March 14, 2009.
Before you select the topic, I strongly encourage each of you to discuss your paper ideas with
me. Final papers are due on or before 5:00 p.m. on Friday, May 1, 2009. I reserve the right to
penalize papers received after the May 1, 2009 deadline.
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Assignment of Final Grades:

Homework Assignments & Class Participation 20 %
Midterm Examination 25 %
Regression Analysis Paper 25 %
Final Examination 30 %

Textbooks:
The following are the required texts for the course:
Berry, William D., and Stanley Feldman. 1985. Multiple Regression in Practice. Beverly
Hills, CA: Sage Publications.
McClendon, McKee. 1994 (reissued 2002). Multiple Regression and Causal Analysis.
Prospect Heights, IL: Waveland Press.

The following books are useful recommended books for more detailed, comprehensive coverage
of the material along with explicit derivations of statistical concepts:
Gujarati, Damodar N. 2003. Basic Econometrics (Fourth Edition). Boston, MA: McGraw-
Hill.
Fox, John. Regression Diagnostics.1991. Beverly Hills, CA: Sage Publications
Kennedy, Peter. 2008. A Guide to Econometrics (Sixth Edition), Malden, MA: Black
Publishing, Inc.
Wooldridge, Jeffrey M. 2006. Introductory Econometrics: A Modern Approach (Third
Edition). Mason, OH: Thomson South-Western.

The following books are useful supplemental books for more basic explanations of key terms
and concepts:
Berry, William D. 1993. Understanding Regression Assumptions. Beverly Hills, CA: Sage
Publications.
Lewis-Beck, Michael. 1980. Applied Regression. Beverly Hills, Sage Publications.
Schroeder, Larry D., David L. Sjoquist, and Paula E. Stephan. 1986. Understanding
Regression Analysis: An Introductory Guide. Newbury Park: Sage Publications.

You should read all the material assigned in the required texts. Most of the recommended and
supplemental books are either too advanced or elementary to be used as central texts in this
course. However, several of them are very good and would be extremely useful books for you to
rely upon for greater detail or additional explanations at various points in the course.
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Computing and Software: Computers and statistical software are absolutely necessary for
employing modern statistical techniques in an effective manner. Therefore, they will be closely
integrated into the course material. We will use STATA for most of the class examples,
assignments, and examinations. But, you can also use other statistical software in this course
(e.g., R, SAS, SPSS, SYSTAT, etc.), as long as it has the analytical routines and capacities that
are required to complete the assignments and examinations.

Topics and Reading Assignments

I. Introduction to Regression Analysis

Reading: McClendon, pp. 1-19

Gujarati, pp. 15-32

Kennedy, pp. 1-10
Wooldridge, pp. 1-19

II. Preliminary Material and Statistical Review

A. Frequency Distributions, Univariate Summary Statistics, Probability

Distributions

Reading: McClendon, pp. 20-25

B. Statistical Inference and the Properties of Statistical Estimators

1. Confidence Intervals & Hypothesis Tests

2. Differences Between Two Means, Two Variances, Etc.

III. Basic Concepts for Understanding Regression Analysis: Functional

Dependence, Linear Transformations, and Linear Combinations

Reading: McClendon, pp. 25-28

Wooldridge, pp 707-802
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IV. The Bivariate Regression Model

A. Introduction: Basic Ideas and Concepts

Reading: McClendon, pp. 28-30

Berry, pp. 1-22

Gujarati, pp. 37-57

B. The Least Squares Criterion and Estimation in the Bivariate Regression

Model

Reading: McClendon, pp.31-41

Berry and Feldman, pp. 9-12

Gujarati, pp. 58-80

Kennedy, pp. 11-59
Wooldridge, pp. 50-66, 89-95, 106-109, 123-126, 176-181, 187-190

C. Goodness of fit, the Correlation Coefficient and R2

Reading: McClendon, pp. 42-49

Gujarati, pp. 79-94

Schroeder, Sjoquist, and Stephan, pp. 23-29
D. Assumptions Underlying the Bivariate Linear Regression Model

Reading: McClendon, pp. 133-146

Berry and Feldman, pp. 9-12

Gujarati, pp. 65-74; 107-110

Kennedy, pp. 11-59
Wooldridge, pp. 50-66, 89-95, 106-109, 123-126, 176-181, 187-190

E. Statistical Inference, Confidence Intervals, and Hypothesis Tests

Reading: McClendon, pp. 147-154

Lewis-Beck, pp. 26-47

Schroeder, Sjoquist, and Stephan, pp. 36-53
Gujarati, pp. 119-163
Kennedy, pp. 51-90
Wooldridge, pp. 126-147
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F. Summary, Extensions, and a Preliminary Look at Residuals, Outliers,

and Influential Cases

Reading: McClendon, pp. 49-59

Berry, pp. 22-88

Gujarati, pp. 164-193

V. The Multiple Regression Model

A. Introduction: Notation, Assumptions, and Interpretation

Reading: McClendon, pp. 60-80

Berry and Feldman, pp. 9-18

Gujarati, pp. 202-211; 230-233

Wooldridge, pp. 73-88

B. Measures of Goodness of Fit

Reading: McClendon, pp. 80-83

Gujarati, pp. 211-225

Schroeder, Sjoquist, and Stephan, pp. 32-36

C. Statistical Inference and the Role of Hypothesis Testing

Reading: McClendon, pp. 133-174

Berry and Feldman, pp. 12-18

Gujarati, pp. 248-273

Kennedy, pp. 60-80
Wooldridge, pp. 147-167, 214-218

D. Models of Substantive Phenomena; The Importance of Model

Assumptions

Reading: McClendon, pp. 83-93, 154-157

Berry, pp. 1-24

Lewis-Beck, pp. 63-66
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E. Summary and a Brief Look at Extensions

Reading: McClendon, pp. 93-118

(McClendon, pp. 119-132)

Gujarati, pp. 273-297

VI. Model Building in Multiple Regression Analysis

A. Model Specification

Reading: McClendon, pp. 288-321

Berry and Feldman, pp. 18-26

Berry, pp. 30-45

Gujarati, pp. 506-560
Kennedy, pp. 71-92
Lewis-Beck, pp. 30-45
Schroeder, Sjoquist, and Stephan, pp. 67-70

B. Functional Forms, Nonlinearity and Transformations

Reading: McClendon, pp. 230-270

Berry and Feldman, pp. 51-72

Berry, pp. 60-66

Gujarati, pp. 561-577
Kennedy, pp. 93-111
Schroeder, Sjoguist, and Stephan, pp. 58-61
Wooldridge, pp. 304-310

C. Nominal Independent Variables

Reading: McClendon, pp. 198-229; 271-287

Gujarati, pp. 297-334

Kennedy, pp. 248-258
Schroeder, Sjoquist, and Stephan, pp. 56-58
Wooldridge, pp. 230-252
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VII. Potential Problems in Multiple Regression Analysis

A. Interpretation of Results

Reading: Fox, pp.3-5

B. Multicollinearity and Its Effects

Reading: McClendon, pp. 161-163

Berry and Feldman, pp. 37-50

Berry, pp. 24-27

Fox, pp. 10-21
Gujarati, pp. 341-370, 506-560
Kennedy, pp. 192-202
Lewis-Beck, pp. 58-63
Schroeder, Sjoquist, and Stephan, pp. 71-72
Wooldridge, pp. 101-105

C. Nonnormal and Nonconstant (Heteroscedastic) Errors

Reading: McClendon, pp. 174-197

Berry and Feldman, pp. 73-88

Berry, pp. 67, 72-81

Fox, pp. 40-53
Gujarati, pp. 387-428
Kennedy, pp. 133-139
Wooldridge, pp. 181-185

D. Measurement Error

Reading: Berry and Feldman, pp. 26-37

Berry, pp. 45-60

Gujarati, pp. 524-528
Kennedy, pp. 157-163
Schroeder, Sjoquist, and Stephan, pp. 70-71
Wooldridge, pp. 318-325
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E. Residual Analysis, Outliers, and Influential Observations

Reading: Berry, pp. 27-29

Fox, pp. 21-40
Gujarati, pp. 518-524
Kennedy, pp. 372-388

VIII. Additional Topics

A. Dichotomous Dependent Variables

Reading: Gujarati, pp. 580-636

Schroeder, Sjoquist, and Stephan, pp. 79-80
Wooldridge, pp. 252-258

B. Simultaneous Equation Models

Reading: McClendon, pp. 288-347

Berry, pp. 1-54
Gujarati, pp. 715-791
Schroeder, Sjoquist, and Stephan, pp. 77-79

C. Nonindependent Disturbances and Time Series Models

Reading: Berry, pp. 67-72

Gujarati, pp. 792-865
Kennedy, pp. 139-156, 163-179
Schroeder, Sjoquist, and Stephan, pp. 72-75