Summary
How was your estimation activity? Andy is showing you both theoretical and practical aspects of what you will come to do, letting you keep them all together.
Within this chapter, you actually learned a lot and you are now able to estimate a simple (one variable) linear regression model and check whether its assumptions are satisfied. This is not to be underestimated for two main reasons:
- Simple linear models are quite often an oversimplification of the real relationship between two variables. Nevertheless, they tend to be considered good enough for the level of accuracy requested within many fields, and this is why they are very popular.
- You will find that a lot of models estimate without checking for assumptions, and you should remember that estimates coming from an invalid model are invalid estimates, at least for descriptive purposes (more on this within Chapter 8, A Gentle Introduction to Model Performance Evaluation). Knowing which are the assumptions behind this popular model...
