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Regression Coefficients
To estimate values of population parameter under
certain assumptions, the fitted regression equation
representing the straight line regression model is
written as
Regression equation Y on X: Y= a + bX
Methods to determine Regression Coefficients
Least Squares Normal Equations
Normal equations with respect to the regression
equation Y on X:
Yc a bX
The values of constants a and b are determined by solving the following normal equations
Y N a b X
XY a X b X 2
y
Y Y r
X X
x
x
X X r
Y Y
Example
Advertisement Expd. (X)Rs
Sales (Y)Rs
78
125
89
137
97
156
69
112
59
107
79
136
68
124
61
108
X=600
Y=1005
XY
X2
Y2
Yc
(Y- Yc)2
9750
6084
15625
129.276
18.29
12193
7921
18769
142.608
31.45
15132
9409
24336
152.304
13.66
7728
4761
12544
118.368
40.55
6313
3481
11449
106.248
0.566
10744
6241
18496
130.488
30.38
8432
4624
15376
117.156
46.84
6588
3721
11664
108.672
0.452
1005.12
XY=76880
X2=46242
Y2=128259
(Y- Yc)2
=182.19
Results
So the regression equation Y on X is
Y = 34.74+1.212 X
In a similar manner we can find out the
regression equation X on Y is
X = 19.26 + 0.75 Y
S.E = (Y- Yc)2 /N = 4.77
T-statistics= Coefficient of the
independent variable / S.E
S yx
Y Y
c
Example
Advertisement Expd. (X)Rs
Sales (Y)Rs
10
14
12
17
15
23
23
25
20
21