9.2. Least-Squares Regression http://www.ck12.org
TABLE9.9:(continued)
Year Investment with 5% Each Year Log of amount
1960 1868 3. 271358
1970 3043 3. 483251
1980 4956 3. 695144
1990 8073 3. 907037
2000 13150 4. 11893
2010 21420 4. 330823If we graphed these transformed data, we would see that we have a linear relationship.
Outliers and Influential Points
Anoutlieris an extreme observation that does not fit the general correlation or regression pattern (see figure below).
By definition, an outlier is defined as an unusual observation; therefore, the inclusion of this observation may affect
the slope and the intercept of the regression line. When examining the scatterplot graph and calculating the regression
equation, it is worth considering whether extreme observations should be included or not.
Let’s use our example above to illustrate the effect of a single outlier. Say that we have a student that has a high GPA,
but suffered from test anxiety the morning of the SAT verbal test and scored a 410. Using our original regression