MUL1ILL

kLGkLSSICN
kLGkLSSICN ANALSIS
ermlLs us Lo predlcL Lhe
value of Lhe dependenL
varlable for a glven value of
Lhe lndependenL varlable
We wlll explaln how mulLlple
regresslon can be used by
declslon makers Lo measure
such relaLlonshlp beLween a
dependenL varlable and Lwo or
more lndependenL varlables
MuL1lLL 8LLA1lCnSPl relaLlonshlp
beLween a dependenL varlable and Lwo
or more lndependenL varlables
MULTPLE REGRESSON study of the
nature of this relationship.
MULTPLE CORRELATON the study of the
degree of the relationship between a
dependent variable and two or more
independent variables.
We wlll esLlmaLe Lhe parameLers of Lhe mulLlple
regresslon equaLlon by Lhe meLhod of LLAS1 SCuA8L
ln general Lhe dependenL varlable ? ls
assoclaLed wlLh/or ls a funcLlon of Lhe
lndependenL varlables x
Where Lhe lndependenL varlable ? ls a funcLlon of M
lndependenL varlables 1hls however does noL lmply
any cause effecL relaLlonshlp beLween Lhe dependenL
varlable and lndependenL varlable or vlce versa
MUL1ILL kLGkLSSICN LANL
1he plane ls flL Lo Lhe scaLLer of daLa polnLs so
as Lo mlnlmlze Lhe verLlcal devlaLlon of Lhe
dependenL varlable from Lhe plane for glven
values of Lhe lndependenL varlables
Slnce we are assumlng llnear relaLlonshlps
for a mulLlple regresslon problems Lhe
surface ls a plane lor nonllnear relaLlonshlps
Lhe surface ls a smooLh curvlllnear surface
raLher Lhan a plane
MUL1ILL LINLAk kLGkLSSICN
MCDLL
? dependenL varlable
lndependenL varlables
ASSuM1lCnS
we have mulLlple llnear relaLlonshlp
Same dlsLrlbuLlon of values for Lhe lndependenL
varlables appears each Llme Lhe experlmenL ls
performed
1he expecLed value of random error Lerm ls zero
varlance of Lhe random error Lerm ls consLanL for each
seL of values of Lhe lndependenL varlables ln a mulLlple
regresslon model
8andom error Lerms are lndependenL for each oLher
for Lhe mulLlple regresslon model
Lrror Lerm for each seL of values for Lhe lndependenL
varlables ls normally dlsLrlbuLed
A8AML1L8S
? values comprlses a normal curve wlLh lLs own
mean and sLandard devlaLlon
lnLercepL parameLer of Lhe regresslon relaLlon
value of Lhe condlLlonal mean when all of Lhe
lndependenL varlables (x1 and x2) are equal Lo
zero
measures Lhe neL change ln Lhe condlLlonal mean
LhaL occurs per unlL change ln x1 when oLher varlables
are consLanL
measures Lhe neL change ln Lhe condlLlonal mean
per unlL change ln x2 when x1 ls held consLanL
LS1IMA1LD MUL1ILL LINLAk
kLGkLSSICN MCDLL
Where
A1b1b2bm polnL esLlmaLes of Lhe
unknown populaLlon parameLers
esLlmaLed values of Lhe condlLlonal
mean
Lhe procedure ls Lo mlnlmlze
Lhe sum of Lhe squares of Lhe
verLlcal devlaLlons beLween
acLual sample values of Lhe
lndependenL varlable ? and
esLlmaLed values of
LxAMLL
MarkeL research sLudles Lhe behavlor of
consumers by uslng mulLlple regresslon
meLhods Several such sLudles have
consldered food expendlLure per famlly on Lhe
basls of LoLal famlly lncome and slze of Lhe
famlly Speclflcally a sLudy ls made of low and
moderaLe lncome famllles selecLed by a
random sample by Lhe markeL researcher

famlly
food expendlLures
? ($)
LoLal famlly lncome
x1( Lhousand $)
slze of famlly (
# of persons) x2
1 400 03 1
2 600 13 2
3 730 23 3
4 1000 4 3
3 1100 3 4
6 1200 6 4
7 1300 73 3
8 1800 10 4
9 2100 14 3
10 2700 28 4
Mlnlmlze Lhls equaLlon Lo geL Lhe normal equaLlons
nC8MAL LCuA1lCnS

famlly ?
1 400 03 1 200 400 03 023 1 160000
2 600 13 2 900 1200 3 223 4 360000
3 730 23 3 1873 2230 73 623 9 362300


13130 79 33 133923 32030 3263 1222 137 21922300
13392379a+1222 +3263
3203033a+3263 +137
68778
17833
A=147.42