Skip to content
Open
Show file tree
Hide file tree
Changes from all commits
Commits
File filter

Filter by extension

Filter by extension

Conversations
Failed to load comments.
Loading
Jump to
Jump to file
Failed to load files.
Loading
Diff view
Diff view
Original file line number Diff line number Diff line change
Expand Up @@ -11,7 +11,7 @@ aliases:

## Overview

The first step before estimating an OLS regression is to validate the model assumptions to ensure the estimates are reliable and the inference drawn is valid.
The first step before estimating an OLS regression is to validate the model assumptions to ensure the estimates are reliable and the inference drawn is valid.

To illustrate how to check for model assumptions with an example, we use the built-in `cars` dataset which includes 50 data points of a car’s stop distance at a given speed. Since the dimensions are in miles per hour and foot, we first convert it into kilometer per hour and meter, respectively.

Expand Down Expand Up @@ -59,4 +59,4 @@ autoplot(
<p align = "center">
<img src = "../images/scale-location.png" width="400">
</p>
- **Scale-Location**: Finally, the scale-location plot shows the standardized residuals for all fitted values. The homoskedasticity assumption states that the error term should be the same across all values of the independent variables. Hence, we should check here if there is any pattern that stands out. In our case, this happens to be the case as the blue line stays rather flat. It would, however, be troublesome if the error value increases for higher speed values(i.e. if there is a “fanning out” pattern).
- **Scale-Location**: Finally, the scale-location plot shows the standardized residuals for all fitted values. The homoskedasticity assumption states that the error term should be the same across all values of the independent variables. Hence, we should check here if there is any pattern that stands out. In our case, this happens to be the case as the blue line stays rather flat. It would, however, be troublesome if the error value increases for higher speed values(i.e. if there is a “fanning out” pattern).
Binary file not shown.