Understanding Business Statistics

CHAPTER 12

Multiple Regression

LEARNING OBJECTIVES

After completing the chapter, you should be able to

1. Describe the F distribution and use an F table.
2. Properly apply the F test in simple linear regression and describe its connection to the t distribution.
3. Discuss the nature of multiple regression, interpret the regression coefficients, and produce basic measures of performance.
4. Use the F test to test the overall relationship and t tests to test individual coefficients in a multiple regression model.
5. Discuss the key issues in building a regression model, including how one might identify the “best” set of independent variables, and use the proper procedure for including qualitative variables in the model.

EVERYDAY STATISTICS

Sabermetrics

Think baseball is all about home runs and fastballs? Two-hundred-million-dollar players with 400-million-dollar egos? Think again. What it's really all about—at least according to the blockbuster book and movie Moneyball—is a laptop computer and late nights with statistics.

Sounds unlikely, but best-selling author Michael Lewis managed to create a compelling drama about sabermetrics, the application of non-traditional statistical analysis to the very traditional game of baseball. It no doubt helped that behind the film was a great storyteller, a great story, and Brad Pitt in the starring role, but the idea of statistics taking front and center ...