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Regression Analysis

This concept was first used by Sir Franci Galton in


1877 while studying the relationship between the height
of fathers and sons.
In general terms, regression is concerned with
describing and evaluating the relationship between a
given variable and one or more other variables.
More specifically, it is an attempt to explain movement
in a variable by reference to movements in one or more
variables.
The statistical technique that express the relationship
between two or more variables in the form of an
equation to estimate the value of a variable, based on
the given value of another variable is called regression
analysis
The variable whose value is to be estimated is called
dependent ( or response) variable and the variable
whose value is used to estimate this is called
independent ( regressor or predictor) variable.
The linear algebraic equation used for expressing a
dependent variable in terms of independent variable is
called linear regression equation.

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

Deviations taken from Actual mean


Regression equation Y on X:

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

= 1.212/ 4.77 = 3.93

Standard Error of the


Estimate
A measure of the precision of the
estimates so obtained from the regression
equations is provided by the Standard
error (S.E.) of the estimate gives us a
measure of the scatter of the observations
about the line of regression.

S yx

Y Y
c

Example
Advertisement Expd. (X)Rs

Sales (Y)Rs

10

14

12

17

15

23

23

25

20

21