Question

Construct a model to predict the Savings based on the following predictors: Education Level, Salary, Cars, Home, and SC Index. The dataset is below . Decide if any predictors should be removed using the p-value criterion and rerun the regression model. Compare the adjusted coefficients of determination.

Couple	Educ Level	Salary	Cars	Home	SC Index	Savings
1	4	90	19	83	3	289
2	2	95	35	134	3	1130
3	2	99	46	110	5	583
4	3	130	24	69	7	1049
5	4	126	42	153	7	612
6	2	73	35	127	2	650
7	3	111	34	98	7	675
8	4	140	53	191	9	347
9	2	52	33	119	2	420
10	2	99	50	147	6	39
11	4	101	40	132	3	5
12	3	134	50	208	10	553
13	2	62	36	91	1	659
14	3	139	45	258	8	648
15	4	84	21	221	4	5
16	2	46	28	124	1	630
17	4	104	40	184	2	698
18	1	54	21	50	1	1247
19	2	88	49	193	4	471
20	3	119	57	265	10	81

Answer 1

The regression output is:

Since Home is insignificant (p-value > 0.05), it should be removed from the regression model.

The new model is:

The adjusted R-square is 0.603.

The adjusted R-square value has increased as compared to the previous model.

The regression model is:

y = 950.9102 -371.5922*x1 + 18.1143*x2 - 17.9741*x3 - 95.2013*x4