Question

In: Statistics and Probability

Is your complete second-order model a statistically useful model for predicting your dependent variable? Justify your...

Is your complete second-order model a statistically useful model for predicting your dependent variable? Justify your response.

complete model = B0+B1X1+B2(X1)2+B3X2+B4X1X2+B5(X1)2X2

Solutions

Expert Solution

Ohh....very subjective question.

It is very difficult to decide which model is best for prediction without having the essential information. However, let me guide you with some points to decide on your own in any situation.

The whole purpose of the regression analysis is to use one or more variables to predict an outcome. Today, we will discuss on linear regression, starting with checking the overall outcome. This step is the most important part of the analysis, and it is actually calculated using the F test, just like ANOVA. Because of this, you will see the output in terms of an F value. To put the F value in perspective, we have to give some detail about the analysis, and we do this using degrees of freedom. All you really need to know about degrees of freedom (df) is that the first value of df reflects the number of predictors, and the second value of df reflects the sample size. In most research, these are presented in parentheses after the F value. Luckily, just about any analytic software out there will interpret your F in the context of your df for you, meaning it gives you a p value right away. If this p value is lower than your significance cutoff (usually .05), you know you have a good regression, meaning it is able to use one or more of your predictors to calculate an estimate for your outcome!

Once you’ve established a nice significant model, the next step is to look at your details. The most overarching detail is R2. This will always range from 0 to 1, and can only be positive. You can multiply this number by 100 to get a percentage explaining how much of the variability in your participants’ outcome scores are explained by your predictors. But keep in mind that this number does not have any meaning unless the regression is significant! This outcome comes in two flavors, natural and adjusted; the natural R2 tends to be higher when you have more variables in the regression (i.e., the more info you have, the more you should be able to explain regardless of how much they relate), while the adjusted R2 takes this artificial inflation into account, and scales back based on the number of predictors.

Once you know everything you could possibly want to know about the overall regression, it is time to dig into your predictors. Each predictor has a corresponding p value, which is different from the overall regression’s p value. If a predictor is significant, you can start making some claims about it. A simple outcome to look at here is the standardized beta (β). This tells you how strong the relationship between the predictor and outcome are after controlling for everything else in the model. It can range from -1 to 1, where (+1) is the strongest, and the sign simply indicates whether there is a positive or negative association. However, another important output can be found from the unstandardized beta (B). This value gives you the slope between the predictor and outcome. We previously talked a little about how these values work for binary predictors here, and continuous predictors are pretty similar. For these, a single unit increase in the predictor corresponds with an increase (for positive B) or decrease (for negative B) corresponding with the B value.


Related Solutions

Complete the following steps: Step 1: State your topic and dependent variable. Start with a simple...
Complete the following steps: Step 1: State your topic and dependent variable. Start with a simple question that you want to know the answer to: “What do (your selected population) think about _____________?” Fill in the blank, and you have your topic, as well as your dependent variable: “opinion about ________________.” Step 2: Define and describe your target population – the people you want to participate in your survey. Step 3: Describe your sampling approach. Will it be probability or...
Your experience tells you that an independent variable is positively correlated to the dependent variable but a multiple regression model give it a negative coefficient.
Your experience tells you that an independent variable is positively correlated to the dependent variable but a multiple regression model give it a negative coefficient. What could cause this? Your judgement is wrong. Statistics don't lie The software package made an error The homoscedasticity assumption has been violated The model may have correlated independent variables The heteroscedasticity assumption has been violated
Given here are the data from a dependent variable and two independent variables. The second independent...
Given here are the data from a dependent variable and two independent variables. The second independent variable is an indicator variable with several categories. Hence, this variable is represented by x2, x3, and x4. How many categories are there for this independent variable? Use a computer to perform a multiple regression analysis on this data to predict y from the x values. Discuss the output and pay particular attention to the dummy variables. y x1 x2 x3 x4 11 1.9...
a) What is the primary difference between the dependent variable of an OLS regression model and...
a) What is the primary difference between the dependent variable of an OLS regression model and a logit model? b) What is the primary difference between the model results of an OLS regression model and a logit model?
Identify whether the following is a nominal variable or a real variable. Justify your answer. Price...
Identify whether the following is a nominal variable or a real variable. Justify your answer. Price of a compact disc   W/P: Price of a pizza: Nominal GDP: Interest paid by bank on deposits in bank accounts: Real GDP: Price of CD/Price of Pizza Real interest rate: Classical economists suggest that Money is    This is however true in the long run.
(a) Write down the overall model form if one wishes to build a second order model...
(a) Write down the overall model form if one wishes to build a second order model for each value of the qualitative variable [5 points] (c) Build a regression model showing the 90% confidence ranges of the regression parameters. Write down the mean estimates of the regression parameters for the model in (a) (d) Write down the 90% bounds of the estimate of the y-intercept (constant term) [2 points] (e) Compute the model prediction for a bulb with a dirty...
1. True or False: An economic model must be realistic in order to be useful.   ...
1. True or False: An economic model must be realistic in order to be useful.                                   True                  False                  2. Does the following set of production possibilities demonstrate the law of increasing costs?             Good #1        Good #2                 120                0                 100                10                 60                    20                     0                30                                   Yes           No           Not enough information to determine                  3. Which ONE of the following is NOT one of the 6 foundation principles of economics?                                   People respond to incentives           People are rational           There is no such thing...
You estimated a regression model using annual returns of ExxonMobil (as a dependent variable) and of...
You estimated a regression model using annual returns of ExxonMobil (as a dependent variable) and of the market (as an independent variable). The R-squared of this regression is 0.2, and the total variance of ExxonMobil's returns in the estimation window is 0.0625. In this case, the variance of the unsystematic (or idiosyncratic) component of ExxonMobil's returns is:
Explain how model organisms make the study of the dependent variable in an experiment easier.
Explain how model organisms make the study of the dependent variable in an experiment easier.
Using Excel generate a simple regression model with Y as the dependent variable and X1 and...
Using Excel generate a simple regression model with Y as the dependent variable and X1 and X2 as the independent variables in the attached spreadsheet. Write the following from the output: Intercept: Coefficients of Independent variable: R-square: Significance F: Based on the model generated, forecast profits for a firm with X1= Based on the model generated, forecast profits for a firm with x1=250 and X2=100. Evaluate the predictability of the model using explanatory language that someone who does not have...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT