Correlation and Regression Analysis - PowerPoint PPT Presentation

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Correlation and Regression Analysis

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Curvilinear correlation - e.g. marginal product costs per unit are not linearly ... If the points generally slope upward to the right ... – PowerPoint PPT presentation

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Title: Correlation and Regression Analysis


1
Chapter 14
  • Correlation and Regression Analysis

2
Some correlation questions
  • Questions
  • Objectives

3
Correlation
  • Strength of the association between two variables
  • Interval and ratio level variables
  • Rank-order variables
  • Categorical Variables
  • Curvilinear correlation - e.g. marginal product
    costs per unit are not linearly related to units
    produced

4
Scatter Diagram
  • Plot points Xi and Yi on a graph and examine the
    general shape
  • If the points generally slope upward to the right
  • If the points generally slope downward to the
    right If there is no pattern to the points
  • If the points lie in straight line

5
Correlation
  • Test the null hypothesis
  • Research Hypothesis
  • r lies between 1 and -1
  • R tested for significance at the 5 or 1 level
    by default in SPSS
  • R is independent of sample size and unit of
    measurement

6
Correlation
  • Be aware of spurious correlation
  • Correlation does not imply causation

7
Regression
  • Simple regression
  • Multiple regression
  • More than one DV
  • ANOVA

8
Objectives of regression
  • Understand a relationship
  • Closer towards causality
  • Predict values of DV for various values of the IV
  • Control outcomes

9
Regression
  • Test the null hypothesis
  • i.e. Predictor X is not significantly related to
    dependent variable Y
  • Research hypothesis
  • i.e. Predictor X is positively / negatively
    related to dependent variable Y

10
Regression
  • Y a bx OR Y alpha beta (x)
  • a alpha constant
  • b beta the coefficient of the independent /
    predictor variable

11
Regression
  • Objective Prediction / Control
  • Values of the constant and the slope.
  • Objective Understanding relationships
  • Statistical significance at specified level
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