Multiple Regression

Introduction And Definitions Page 1

(Speaker)

Recall that a simple linear regression model describes the relationship between one independent (or explanatory) variable, and one dependent (or response) variable. In the example:

Car Value equals 21,375 minus 1,215 times the car's age in years.

We can interpret the relationship between the variables as:

“For every 1 year increase in a car's age, the car's value decreases by $1,215.”

Generally, a simple linear regression that fits the data well is helpful in predicting the relationship between two variables. However, a simple linear regression often does not tell the whole story. Further, there are many reasons that a correlation between two variables cannot be used to infer causation.