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qwertyup23 qwertyup23
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4 years ago
Given the amount of money and effort that you have spent on your education, you wonder if it was (is) all worth it.
 
  You therefore collect data from the Current Population Survey (CPS) and estimate a linear relationship between earnings and the years of education of individuals. What would be the effect on your regression slope and intercept if you measured earnings in thousands of dollars rather than in dollars? Would the regression R2 be affected? Should statistical inference be dependent on the scale of variables? Discuss.
  What will be an ideal response?
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Amberalmonte3Amberalmonte3
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4 years ago
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Answer: It should be clear that interpretation of estimated relationships and statistical inference should not depend on the units of measurement. Otherwise whim could dictate conclusions. Hence the regression R2 and statistical inference cannot be effected. It is easy but tedious to show this mathematically. Next, the intercept indicates the value of Y when X is zero. The change in the units of measurement have no effect on this, since the change in is cancelled by the change in . The slope coefficient will change to compensate for the change in the units of measurement of X. In the above case, the decimal point will move 3 digits to the left.
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Thanks!
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One day ago
TY :)
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