Regression analysis

Simply stated, regression analysis is a statistical method that determines the extent to which a relationship exists between two variables. If the relationship is strong enough, one can then accurately predict the values of one variable based on the values of another using a simple linear formula.

There are many different types of relationships that can be identified, such as a curvilinear, u-shaped, or exponential relationship. However, the more common relationship, and the relationship that enables one to easily predict the value of a dependent variable, is the straight-line linear relationship.

To determine whether a relationship exists between two variables, one must plot the values on a graph, in which the independent variable is on the X-axis and the dependent variable is on the Y-axis. Since the dependent variable is what one is hoping to predict, the simple linear formula is Y = bo + b1X, in which:

  • Y is the value of the dependent variable
  • b0 is the Y-intercept, which is the value of Y when X=0
  • b1 is the slope, which is the change in Y per one unit change in X
  • X is the value of the independent variable

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