C H A P T E R 1 2 L I N E A R R E G R E S S I O N A N D C O R R E L AT I O N

This presentation is based on material and graphs from Open Stax and is copyrighted by Open Stax and
Georgia Highlands College.
INTRODUCTION
Professionals often want to know how two or more numeric variables are
related.
For example, is there a relationship between the grade on the second
math exam a student takes and the grade on the final exam? If there is
a relationship, what is the relationship and how strong is it?
In another example, your income maybe determined by your education,
your profession, your years of experience, and your ability. The amount
you pay a repair person for labor is often determined by an initial
amount plus an hourly fee.
The type of data described in the examples is bivariate data — "bi" for
two variables. In reality, statisticians use multivariate data, meaning
many variables. In this chapter, you will be studying the simplest form
of regression, "linear regression" with one independent variable (x).
This involves data that fits a line in two dimensions. You will also study
correlation which measures how strong the relationship is.
12.1 | LINEAR EQUATIONS
LINEAR EQUATIONS
Linear regression for two variables is based on a linear equation
with one independent variable.

The equation has the form: y = a+bx

a and b are constant numbers.
x is the independent variable
y is the dependent variable.

Typically, you choose a value to substitute for the independent variable

and then solve for the dependent variable
LINEAR EQUATIONS
The graph of a linear equation of the form y=a+bx is
a straight line.
Any line that is not vertical can be described by this
equation.
EXAMPLE OF LINEAR
EQUATIONS
Aaron's Word Processing Service (AWPS) does word processing. The
rate for services is $32 per hour plus a $31.50 one-time charge.
The total cost to a customer depends on the number of hours it
takes to complete the job. Find the equation that expresses the
total cost in terms of the number of hours required to complete the
job.
Let x= the number of hours it takes to get the job done.
Let y= the total cost to the customer.
The $31.50 is a fixed cost.
If it takes x hours to complete the job, then (32)(x) is the cost of the
word processing only.
The total cost is: y= 31.50 + 32x
SLOPE AND Y-INTERCEPT OF
A LINEAR EQUATION
For the linear equation y=a+bx,
b=slope and a=y-intercept.

From algebra recall that the slope is a number that describes the
steepness of a line, and the y-intercept is the ycoordinate of the
point (0, a) where the line crosses the y-axis.
THREE GRAPHS F0R LINEAR EQUATIONS

Three possible graphs of y = a + bx.

(a)If b > 0, the line slopes upward to the right.
(b)If b = 0, the line is horizontal.
(c)If b < 0, the line slopes downward to the right.
EXAMPLE OF LINEAR
EQUATIONS
Svetlana tutors to make extra money for college. For each tutoring
session, she charges a one-time fee of $25 plus $15 per hour of
tutoring. A linear equation that expresses the total amount of
money Svetlana earns for each session she tutors is y= 25 + 15x.
What are the independent and dependent variables? What is the y-
intercept and what is the slope? Interpret them using complete
sentences.
SOLUTION TO EXAMPLE
The independent variable (x) is the number of hours Svetlana
tutors each session.
The dependent variable (y) is the amount, in dollars, Svetlana earns
for each session.
The y-intercept is 25 (a = 25).
At the start of the tutoring session, Svetlana charges a one-time fee
of $25 (this is when x= 0).
The slope is 15 (b= 15).
For each session, Svetlana earns $15 for each hour she tutors.
12.2 | SCATTER PLOTS
SCATTERPLOT
Before we take up the discussion of linear regression and
correlation, we need to examine a way to display the relation
between two variables x and y. The most common and easiest way
is a scatter plot. The following example illustrates a scatter plot.
SCATTERPLOT
A scatter plot shows the direction of a relationship between the
variables.
A clear direction happens when there is either:
• High values of one variable occurring with high values of the
other variable or low values of one variable occurring with low
values of the other variable.
• High values of one variable occurring with low values of the other
variable.
You can determine the strength of the relationship by looking at the
scatter plot and seeing how close the points are to a line, a power
function, an exponential function, or to some other type of function.
For a linear relationship there is an exception. Consider a scatter
plot where all the points fall on a horizontal line providing a "perfect
fit."
TRENDS IN SCATTERPLOTS
When you look at a scatterplot, you want to notice the overall
pattern and any deviations from the pattern. The following
scatterplot examples illustrate these concepts.
TRENDS IN SCATTERPLOTS
When you look at a scatterplot, you want to notice the overall
pattern and any deviations from the pattern. The following
scatterplot examples illustrate these concepts.
PATTERNS IN SCATTERPLOTS
PATTERNS IN SCATTERPLOTS
PATTERNS IN SCATTERPLOTS
SCATTERPLOT TO LINEAR
REGRESSION
In this chapter, we are interested in scatter plots that show a linear
pattern. Linear patterns are quite common.
The linear relationship is strong if the points are close to a straight
line, except in the case of a horizontal line where there is no
relationship.
If we think that the points show a linear relationship, we would like
to draw a line on the scatter plot. This line can be calculated
through a process called linear regression.
However, we only calculate a regression line if one of the variables
helps to explain or predict the other variable. If x is the
independent variable and y the dependent variable, then we can
use a regression line to predict y for a given value of x.
12.3 | THE REGRESSION
EQUATION
LINE OF BEST FIT
Data rarely fit a straight line exactly. Usually,
you must be satisfied with rough predictions.
Typically, you have a set of data whose
scatter plot appears to "fit“ a straight line.
This is called a Line of Best Fit or Least-
Squares Line.
LEAST-SQUARES REGRESSION LINE

The third exam score, x, is the independent variable and the final exam score, y,
is the dependent variable. We will plot a regression line that best "fits" the data.
If each of you were to fit a line "by eye," you would draw different lines. We can
use what is called a least-squares regression line to obtain the best fit line.
Y-HAT

The ŷ is read "yhat“ and is the estimated value of y. It is the value of

y obtained using the regression line. It is not generally equal to y
from data.
RESIDUAL OR ERROR

The term y0 – ŷ0 = ε0 is called the "error" or residual. It is not an error in the

sense of a mistake. The absolute value of a residual measures the vertical distance
between the actual value of y and the estimated value of y. In other words, it
measures the vertical distance between the actual data point and the predicted
point on the line.
RESIDUAL OR ERROR

If the observed data point lies above the line,the residual is positive, and the
line underestimates the actual data value for y. If the observed data point
lies below the line, the residual is negative,and the line overestimates that
actual data value for y. In the diagram, y0 – ŷ0 = ε0 is the residual for the
point shown. Here the point lies above the line and the residual is positive.
SUM OF SQUARED ERRORS
(SSE)
ε= the Greek letter epsilon
For each data point, you can calculate the residuals or errors,
yi -ŷi =εi for i= 1, 2, 3, ..., 11.
Each |ε| is a vertical distance.
If you square each ε and add them together, you get the Sum of
Squared Errors (SSE).
Using calculus, you can determine the values of a and b that make
the SSE a minimum. When you make the SSE a minimum, you have
determined the points that are on the line of best fit.
It turns out that the line of best fit has the equation: y-hat= a +
bx
LINEAR REGRESSION
The process of fitting the best-fit line is called linear
regression.
The idea behind finding the best-fit line is based on
the assumption that the data are scattered about a
straight line.
The criteria for the best fit line is that the sum of the
squared errors (SSE) is minimized, that is, made as
small as possible.
Any other line you might choose would have a
higher SSE than the best fit line.
TO CREATE A SCATTERPLOT
AND THE LINE OF BEST FIT IN
THE CALCULATOR
DATA
ENTRY
Enter Variable 1 (x—
independent--predictor) into
list (L1)
Enter Variable 2 (y – dependent
—response) into list (L2)
 Be sure to keep the data paired as
presented

EXAMPLE: Does a relationship

exist between the year and
population within 20 minutes of
Wal-Mart in Gordon County,
GA?
 VISUAL INTERPRETATION OF
CORRELATION
Create a Scatterplot by:
Turn on Plot 1 –choose option 1,
Go to STAT PLOT—Press arrow to left highlight “On”
CONTINUE SETUP OF
SCATTERPLOT
Indicate location of data---
Select type of graph –arrow Xlist: L1 (default)
down to “type”, arrow right 1 Ylist = L2 (default)
time
SETUP WINDOW—SCALES
FOR X- & Y- AXIS
Press EXAMPLE:
GENERIC WINDOW
xmin= based on data given (at least
lowest x value)
Xmax = based on data given (at least
highest x-value)
Xscl= choose a reasonable value
Ymin = based on data given (at least
lowest y value)
Ymax = based on data given (at least
highest y value
Yscl = choose a reasonable value
GRAPH
Ask yourself a few questions:
 Does there appear to be an overall pattern
Press to see scatterplot on within the scatterplot?
screen  Does the overall pattern appear to be
LINEAR (could you draw a line through
some of the points?)?
 Does the overall pattern appear to be
positive or negative?

Regardless of your responses to

these questions, go to next step…
ALGEBRAIC INTERPRETATION
OF CORRELATION
Scroll down to STAT
Turn on STAT DIAGNOSTICS DIAGNOSTICS—highlight “ON”
and enter

Go to
ALGEBRAIC INTERPRETATION
OF CORRELATION
Press Scroll down and choose option
Arrow right to highlight “CALC” 4: LinReg (ax+b)
 ALGEBRAIC INTERPRETATION
OF CORRELATION
Indicate location of x-variable
and y-variable
Enter L1 (default) –press
Enter L2 (default) –press
Arrow down three times to
highlight “calculate”
ALGEBRAIC INTERPRETATION
OF CORRELATION
Press ENTER to see results

The sample LINEAR CORRELATION

COEFFICIENT is represented by “r” on
the results screen

To determine if a relationship exists

and is statistically significant, compare
the “r” from the calculator to the
standardized “r”

GUIDELINE: If then a relationship

exists and is statistically significant.
Therefore, proceed to next step. If the
relationship is NOT statistically
significant, STOP!
 FINDING LINEAR
REGRESSION EQUATION
The results window has additional
information that is used to write (find)
the linear regression equation that
models the relationship between the
variables
 a: Slope (rate of change) of the line, will be
coefficient of “x”
 b: y-intercept of the line

Write in the form: y = ax + b

For the example, the equation would
be y = 1139.15x – 2217922.17
GRAPH REGRESSION LINE
WITH
Press
SCATTERPLOT
Press
Enter linear equation result
COEFFICIENT OF
DETERMINATION
On the results window, r2
represents the “coefficient of
determination”
PRACTICE OF USING THE
CALCULATOR
A random sample of X y

11statistics students 65 175

67 133
produced the following
71 185
data, where x is the third
71 163
exam score out of 80,
66 126
and y is the final exam
75 198
score out of 200. What is
67 153
the best-fit line for this
70 163
data? 71 159
69 151
69 159
PRACTICE OF USING THE
CALCULATOR
A random sample of X y
11statistics students produced 65 175
the following data, where x is 67 133
the third exam score out of 80, 71 185
and y is the final exam score
71 163
out of 200. What is the best-fit
line for this data? 66 126
75 198
The least squares regression
line (best-fit line) for the third- 67 153
exam/final-exam example has 70 163
the equation 71 159
= −173.51+4.83x 69 151
69 159
PREDICTION WARNING
Remember, it is always important to plot a scatter diagram
first.
If the scatter plot indicates that there is a linear relationship
between the variables, then it is reasonable to use a best fit
line to make predictions for y given x within the domain of x-
values in the sample data, but not necessarily for x-values
outside that domain.
You could use the line to predict the final exam score for a
student who earned a grade of 73 on the third exam. You
should NOT use the line to predict the final exam score for a
student who earned a grade of 50 on the third exam, because
50 is not within the domain of the x-values in the sample data,
which are between 65 and 75.
UNDERSTANDING SLOPE
The slope of the line, b, describes how changes in the variables are
related. It is important to interpret the slope of the line in the
context of the situation represented by the data. You should be able
to write a sentence interpreting the slope in plain English.
INTERPRETATION OF THE SLOPE: The slope of the best-fit line tells
us how the dependent variable (y) changes for every one unit
increase in the independent (x) variable, on average.
THIRD EXAM vs FINAL EXAM EXAMPLE Slope: The slope of the line is
b= 4.83.
Interpretation: For a one-point increase in the score on the third
exam, the final exam score increases by 4.83 points, on average.
THE CORRELATION
COEFFICIENT “R”
Besides looking at the scatter plot and seeing that a line seems
reasonable, how can you tell if the line is a good predictor? Use the
correlation coefficient as another indicator (besides the scatterplot)
of the strength of the relationship between xand y.
The correlation coefficient, r, developed by Karl Pearson in the early
1900s, is numerical and provides a measure of strength and
direction of the linear association between the independent
variable x and the dependent variable y. The correlation coefficient
is calculated as
R = where n= the number of data points.
If you suspect a linear relationship between x and y, then r can
measure how strong the linear relationship is.
WHAT THE VALUE OF R
• The value of r is always between –1 and +1: –1 ≤ r≤ 1.
• The size of the correlation r indicates the strength of the linear
relationship between x and y. Values of r close to –1or to +1
indicate a stronger linear relationship between x and y.
• If r= 0 there is absolutely no linear relationship between x and
y(no linear correlation).
• If r = 1, there is perfect positive correlation. If r = –1, there is
perfect negative correlation. In both these cases, all of the original
data points lie on a straight line. Of course, in the real world, this
will not generally happen.
WHAT THE SIGN OF R TELLS
US
• A positive value of r means that when x increases, y tends
to increase and when x decreases, y tends to decrease
(positive correlation).
• A negative value of r means that when x increases, y tends
to decrease and when x decreases, y tends to increase
(negative correlation).
• The sign of r is the same as the sign of the slope, b, of the
best-fit line.
NOTE Strong correlation does not suggest that x causes y or y
causes x.
We say “ correlation does not imply causation."
SCATTERPLOTS AND CORRELATION

(a)A scatter plot showing data with a positive correlation. 0 < r < 1
(b)A scatter plot showing data with a negative correlation. –1 < r < 0
(c)A scatter plot showing data with zero correlation. r = 0
THE COEFFICIENT OF
DETERMINATION “R²”
The variable r² is called the coefficient of determination and is the
square of the correlation coefficient, but is usually stated as a
percent, rather than in decimal form. It has an interpretation in
the context of the data:
• r², when expressed as a percent, represents the percent of
variation in the dependent (predicted) variable y that can be
explained by variation in the independent (explanatory) variable x
using the regression (best-fit) line.
•1– r²,when expressed as a percentage, represents the percent of
variation in y that is NOT explained by variation in x using the
regression line. This can be seen as the scattering of the observed
data points about the regression line.
THE COEFFICIENT OF
DETERMINATION “R²”
Consider the third exam/final exam example introduced in the previous
section
• The line of best fit is: ŷ= –173.51 + 4.83x
• The correlation coefficient is r= 0.6631
• The coefficient of determination is r² = (0.66312)² = 0.4397
• Interpretation of r² in the context of this example:
• Approximately 44% of the variation (0.4397 is approximately 0.44) in the
final-exam grades can be explained by the variation in the grades on the
third exam, using the best-fit regression line.
• Therefore ,approximately 56% of the variation (1–0.44=0.56) in the final
exam grades cannot be explained by the variation in the grades on the
third exam, using the best-fit regression line. (This is seen as the scattering
of the points about the line.)
12.4 TESTING THE
SIGNIFICANCE OF THE
CORRELATION COEFFICIENT
The correlation coefficient, r, tells us about the strength and
direction of the linear relationship between x and y.
However, the reliability of the linear model also depends on
how many observed data points are in the sample.
We need to look at both the value of the correlation
coefficient r and the sample size n, together.
We perform a hypothesis test of the "significance of the
correlation coefficient" to decide whether the linear
relationship in the sample data is strong enough to use to
model the relationship in the population.
12.4 TESTING THE
SIGNIFICANCE OF THE
CORRELATION COEFFICIENT
The sample data are used to compute r, the correlation coefficient for
the sample. If we had data for the entire population, we could find the
population correlation coefficient. But because we have only have
sample data, we cannot calculate the population correlation coefficient.
The sample correlation coefficient, r, is our estimate of the unknown
population correlation coefficient.
The symbol for the population correlation coefficient is ρ, the Greek
letter "rho."
ρ = population correlation coefficient (unknown)
r = sample correlation coefficient (known; calculated from sample data)
12.4 POPULATION
CORRELATION COEFFICIENT
The hypothesis test lets us decide whether the value of the population
correlation coefficient ρ is "close to zero" or "significantly different from
zero". We decide this based on the sample correlation coefficient r and
the sample size n.
If the test concludes that the correlation coefficient is significantly
different from zero, we say that the correlation coefficient is
"significant."
• Conclusion: There is sufficient evidence to conclude that there is a
significant linear relationship between x and y because the correlation
coefficient is significantly different from zero.
• What the conclusion means: There is a significant linear relationship
between x and y. We can use the regression line to model the linear
relationship between x and yin the population.
12.4 POPULATION
CORRELATION COEFFICIENT
If the test concludes that the correlation coefficient is not
significantly different from zero (it is close to zero), we say
that correlation coefficient is "not significant".
• Conclusion: "There is insufficient evidence to conclude that
there is a significant linear relationship between x and y
because the correlation coefficient is not significantly
different from zero."
• What the conclusion means: There is not a significant linear
relationship between x and y. Therefore, we CANNOT use the
regression line to model a linear relationship between x and
yin the population.
REMEMBER
•If r is significant and the scatterplot shows a linear
trend, the line can be used to predict the value of y
for values of x that are within the domain of
observed x values.
•If r is not significant OR if the scatterplot does not
show a linear trend, the line should not be used for
prediction.
• If r is significant and if the scatter plot shows a
linear trend, the line may NOT be appropriate or
reliable for prediction OUTSIDE the domain of
observed x values in the data.
PERFORMING THE
HYPOTHESIS TEST
• Null Hypothesis: H0: ρ= 0
• Alternate Hypothesis: Ha: ρ≠ 0
WHAT THE HYPOTHESES MEAN IN WORDS:
• Null Hypothesis H0: The population correlation coefficient IS
NOT significantly different from zero. There IS NOT a significant
linear relationship(correlation) between x and y in the
population.
•Alternate Hypothesis Ha: The population correlation
coefficient IS significantly DIFFERENT FROM zero. There IS A
SIGNIFICANT LINEAR RELATIONSHIP (correlation) between x and
y in the population.
DRAWING A CONCLUSION:
METHOD 1 (USING THE P-
VALUE
If the p-value is less than the significance level (α = 0.05):
• Decision: Reject the null hypothesis.
• Conclusion: "There is sufficient evidence to conclude that there is
a significant linear relationship between x and y because the
correlation coefficient is significantly different from zero."

If the p-value is NOT less than the significance level (α = 0.05)

• Decision: DO NOT REJECT the null hypothesis.
• Conclusion: "There is insufficient evidence to conclude that there
is a significant linear relationship between x and y because the
correlation coefficient is NOT significantly different from zero."
DRAWING A CONCLUSION:
METHOD 2 (USE A TABLE OF
CRITICAL VALUES)
In this chapter of this textbook, we will always use a significance
level of 5%, α= 0.05
The 95% Critical Values of the Sample Correlation Coefficient Table
can be used to give you a good idea of whether the computed value
of r is significant or not.
Compare r to the appropriate critical value in the table.
If r is not between the positive and negative critical values, then
the correlation coefficient is significant.
If r is significant, then you may want to use the line for prediction.
PRACTICE OF USING THE
CALCULATOR
A random sample of X y

11statistics students 65 175

67 133
produced the following
71 185
data, where x is the third
71 163
exam score out of 80,
66 126
and y is the final exam
75 198
score out of 200. Can we
67 153
use the line to predict
70 163
the final exam score 71 159
(predicted y value)? 69 151
69 159
CAN WE USE THE
REGRESSION LINE TO
PREDICT FINAL EXAM
SCORES
H0: ρ = 0
Ha: ρ ≠ 0 α = 0.05
• Use the "95% Critical Value" table for r with df=n– 2 = 11 – 2 = 9.
• The critical values are –0.602 and +0.602
• Since 0.6631 > 0.602, r is significant.
• Decision: Reject the null hypothesis.
• Conclusion: There is sufficient evidence to conclude that there is a
significant linear relationship between the third exam score (x) and the
final exam score (y) because the correlation coefficient is significantly
different from zero.
Because r is significant and the scatterplot shows a linear trend, the
regression line can be used to predict final exam scores.
ASSUMPTIONS IN TESTING
THE SIGNIFICANCE OF THE
CORRELATION COEFFICIENT
Testing the significance of the correlation coefficient requires
that certain assumptions about the data are satisfied. The
premise of this test is that the data are a sample of observed
points taken from a larger population.
We have not examined the entire population because it is not
possible or feasible to do so. We are examining the sample to
draw a conclusion about whether the linear relationship that
we see between x and y in the sample data provides strong
enough evidence so that we can conclude that there is a
linear relationship between x and y in the population.
ASSUMPTIONS IN TESTING
THE SIGNIFICANCE OF THE
CORRELATION COEFFICIENT
The regression line equation that we calculate from the sample data
gives the best-fit line for our particular sample. We want to use this
best-fit line for the sample as an estimate of the best-fit line for the
population. Examining the scatterplot and testing the significance of
the correlation coefficient helps us determine if it is appropriate to do
this.
The assumptions underlying the test of significance are:
• There is a linear relationship in the population that models the
average value of y for varying values of x. In other words, the expected
value of y for each particular value lies on a straight line in the
population. (We do not know the equation for the line for the
population. Our regression line from the sample is our best estimate of
this line in the population.)
ASSUMPTIONS IN TESTING
THE SIGNIFICANCE OF THE
CORRELATION COEFFICIENT
•They values for any particular x value are normally distributed
about the line. This implies that there are more y values scattered
closer to the line than are scattered farther away. Assumption (1)
implies that these normal distributions are centered on the line: the
means of these normal distributions of y values lie on the line.
•The standard deviations of the population y values about the line
are equal for each value of x. In other words, each of these normal
distributions of y values has the same shape and spread about the
line.
• The residual errors are mutually independent (no pattern).
• The data are produced from a well-designed, random sample or
randomized experiment.
EXAMPLE OF NORMAL DISTRIBUTED DATA

The y values for each x value are normally distributed about the line with the same standard deviation.
For each x value, the mean of the y values lies on the regression line. More y values lie near the line
than are scattered further away from the line.
12.5 PREDICTION
PREDICTION
Recall the third exam/final exam example. We examined the
scatterplot and showed that the correlation coefficient is
significant. We found the equation of the best-fit line for the final
exam grade as a function of the grade on the third-exam. We can
now use the least-squares regression line for prediction.
Suppose you want to estimate, or predict, the mean final exam
score of statistics students who received 73 on the third exam. The
exam scores(x-values) range from 65 to 75. Since73 is between the
x-values 65 and 75, substitute x=73 into the equation.
Then: = −173.51+4.83(73)=179.08
We predict that statistics students who earn a grade of 73 on the
third exam will earn a grade of 179.08 on the final exam, on
average.
PREDICTION
Recall the third exam/final exam example.
y-hat = −173.51+4.83(x)
a. What would you predict the final exam score to be for a student
who scored a 66 on the third exam?

b. What would you predict the final exam score to be for a student
who scored a 90 on the third exam?
PREDICTION
a. What would you predict the final exam score to be for a student who scored a
66 on the third exam?
145.27
b. What would you predict the final exam score to be for a student who scored a
90 on the third exam?
The x values in the data are between 65 and 75. Ninety is outside of the domain
of the observed x values in the data (independent variable), so you cannot
reliably predict the final exam score for this student. (Even though it is possible
to enter 90 into the equation for x and calculate a corresponding y value, the y
value that you get will not be reliable.) To understand really how unreliable the
prediction can be outside of the observed x values observed in the data, make
the substitution x= 90 into the equation.
= −173.51+4.83(90) = 261.19
The final-exam score is predicted to be 261.19. The largest the final-exam score
can be is 200.
INTERPOLATION AND
EXTRAPOLATION
The process of predicting inside of the observed x
values observed in the data is called interpolation.

The process of predicting outside of the observed x

values observed in the data is called extrapolation.
12.6 OUTLIERS
OUTLIERS
In some data sets, there are values (observed data points) called
outliers. Outliers are observed data points that are far from the least
squares line. They have large "errors", where the "error" or residual
is the vertical distance from the line to the point.
Outliers need to be examined closely. Sometimes, for some reason
or another, they should not be included in the analysis of the data.
It is possible that an outlier is a result of erroneous data.
Other times, an outlier may hold valuable information about the
population under study and should remain included in the data. The
key is to examine carefully what causes a data point to be an
outlier.
OUTLIERS
Besides outliers, a sample may contain one or a few points that are
called influential points. Influential points are observed data
points that are far from the other observed data points in the
horizontal direction. These points may have a big effect on the
slope of the regression line. To begin to identify an influential point,
you can remove it from the data set and see if the slope of the
regression line is changed significantly.
Computers and many calculators can be used to identify outliers
from the data. Computer output for regression analysis will often
identify both outliers and influential points so that you can examine
them.
IDENTIFYING OUTLIERS
We could guess at outliers by looking at a graph of the scatterplot and best
fit-line. However, we would like some guideline as to how far away a point
needs to be in order to be considered an outlier. As a rough rule of thumb,
we can flag any point that is located further than two standard
deviations above or below the best-fit line as an outlier. The
standard deviation used is the standard deviation of the residuals or
errors.
We can do this visually in the scatterplot by drawing an extra pair of lines
that are two standard deviations above and below the best-fit line. Any data
points that are outside this extra pair of lines are flagged as potential
outliers. Or we can do this numerically by calculating each residual and
comparing it to twice the standard deviation. On the TI-83, 83+, or 84+, the
graphical approach is easier. The graphical procedure is shown first, followed
by the numerical calculations. You would generally need to use only one of
these methods.
GRAPHICALLY IDENTIFYING
OUTLIERS
If we were to measure the vertical distance from any data point to
the corresponding point on the line of best fit and that distance
were equal to 2s or more, then we would consider the data point to
be "too far“ from the line of best fit. We need to find and graph the
lines that are two standard deviations below and above the
regression line. Any points that are outside these two lines are
outliers. We will call these lines Y2 and Y3:
Remember Y1 or is the line of best fit. Using the third exam and
final exam data, the line of best fit was
= −173.51+4.83(x)
GRAPHICALLY IDENTIFYING
OUTLIERS
As we did with the equation of the regression line and the
correlation coefficient, we will use technology to calculate this
standard deviation for us. Using the LinRegTTest with this data,
scroll down through the output screens to find s= 16.412.
Since the data is already in the calculator, Go to STAT, TESTS, down
to LinRegTTest. Scroll down until you see s.
= −173.51+4.83(x)
Line Y2 = −173.51+4.83(x) – 2(16.4) (2 standard deviations
below )
Line Y3 = −173.51+4.83(x) + 2(16.4) (2 standard deviations
above )
GRAPHICALLY IDENTIFYING
OUTLIERS
1. Make a scatterplot using = −173.51+4.83(x)
2. Enter the two lines in the y=
Line Y2 = −173.51+4.83(x) – 2(16.4)
Line Y3 = −173.51+4.83(x) + 2(16.4)
3. Press ZOOM and then 9. 9 is ZoomStat
4. You will find that the only data point that is not between lines Y2
and Y3 is the point x = 65, y = 175. On the calculator screen it is
just barely outside these lines. The outlier is the student who had a
grade of 65 on the third exam and 175 on the final exam; this point
is further than two standard deviations away from the best-fit line.
NUMERICAL IDENTIFICATION
OF OUTLIERS
To find the numerical identification of outliers, the first step is to
make a table to put the values in. It might be easy to complete this
table in excel. Again I am using the third exam and final exam data.
The first column will be your x-values.
The second column will be your y-values.
The third column will be the value you get when you pull x in the
line of best fit (
The fourth column will be y (second column) - (third column). We
call these the residuals.
NUMERICAL IDENTIFICATION
OF OUTLIERS
x y y - (residuals)
65 175 -175.5 + 4.83(65) = 140 175 – 140 = 35
67 133 -175.5 + 4.83(67) = 150 133 – 150 = -17
71 185 -175.5 + 4.83(71) = 169 185 – 169 = 16
71 163 -175.5 + 4.83(71) = 169 163 – 169 = -6
66 126 -175.5 + 4.83(66) = 145 126 – 145 = -19
75 198 -175.5 + 4.83(75) = 189 198 – 189 = 9
67 153 -175.5 + 4.83(67) = 150 153 – 150 = 3
70 163 -175.5 + 4.83(70) = 164 163 – 164 = -1
71 159 -175.5 + 4.83(71) = 169 159 – 169 = -10
69 151 -175.5 + 4.83(69) = 160 151 – 160 = -9
69 159 -175.5 + 4.83(69) = 160 159 – 160 = -1
NUMERICAL IDENTIFICATION
OF OUTLIERS
As we did with the equation of the regression line and the correlation
coefficient, we will use technology to calculate this standard deviation
for us. Using the LinRegTTest with this data, scroll down through the
output screens to find s= 16.412.
Since the data is already in the calculator, Go to STAT, TESTS, down to
LinRegTTest. Scroll down until you see s.
We are looking for all data points for which the residual is
greater than 2s = 2(16.4) = 32.8 or
less than -2s = -2(16.4) = -32.8
The point (65,175) has a residual of 35 so it is outside the range.
It is a potential outlier.
REMOVING OUTLIERS
Numerically and graphically, we have identified the point (65, 175)
as an outlier.
We should re-examine the data for this point to see if there are any
problems with the data.
 If there is an error, we should fix the error if possible, or delete the
data.
If the data is correct, we would leave it in the data set.
For this problem, we will suppose that we examined the data and
found that this outlier data was an error. Therefore we will continue
on and delete the outlier, so that we can explore how it affects the
results, as a learning experience.
REMOVING OUTLIERS
Compute a new best-fit line and correlation coefficient using the ten
remaining points:
1. On the TI-83, TI-83+, TI-84+ calculators, delete the outlier from L1
and L2.
2. Using the LinReg(ax+b) or LinRegTTest, the new line of best fit and
the correlation coefficient are:
ŷ= –355.19 + 7.39x and r= 0.9121

The new line with r=0.9121 is a stronger correlation than the original
(r=0.6631) because r=0.9121is closer to one. This means that the new
line is a better fit to the ten remaining data values. The line can better
predict the final exam score given the third exam score.