Simple regression is used to examine the relationship between one dependent and one independent variable. After performing an analysis, the regression statistics can be used to predict the dependent variable when the independent variable is known. Regression goes beyond correlation by adding prediction capabilities. 

For example, a medical researcher might want to use body weight (independent variable) to predict the most appropriate dose for a new drug (dependent variable). The purpose of running the regression is to find a formula that fits the relationship between the two variables. The regression line (known as the least squares line) is a plot of the expected value of the dependent variable for all values of the independent variable. Technically, it is the line that "minimizes the squared residuals". The regression line is the one that best fits the data on a scatter plot.  

Using the regression equation, the dependent variable may be predicted from the independent variable. The slope of the regression line (b) is defined as the rise divided by the run. The y intercept (a) is the point on the y axis where the regression line would intercept the y axis. The slope and y intercept are incorporated into the regression equation. The intercept is usually called the constant, and the slope is referred to as the coefficient. Since the regression model is usually not a perfect predictor, there is also an error term in the equation. 

In the regression equation, y is always the dependent variable and x is always the independent variable. Here are three equivalent ways to mathematically describe a linear regression model. 

y = intercept + (slope x) + error 

y = constant + (coefficient x) + error 

y = a + bx + e 


business research methods

February 15, 2018