Regression Analysis Let’s assume that you get a new job as a realtor. You decide to apply regression analysis to give better guidance to your customers. The following worksheet will help you to analyz
10/3/21, 11:44 PM INFO 5880 file:///Users/jaswanthgarudachedu/Downloads/Research Project 5880.html 1/2 I N FO 5 8 80 R ese arc h P ro je ct R eg re ssio n A naly sis L e t f o llo w in g w ork sh eet w il l h elp y o u t o a n aly ze t h e f a c to rs w hic h w il l a ffe ct t h e p urc h ase p ric e o f y o ur c u sto m er P art 1 ) D ata C olle ctio n C olle ct a n d c o d e t h e d ata : W e a re g oin g t o c o lle ct d ata f o r t h e M ontg om ery a n d A ub urn a re a. G o t o a w eb sit e p ro vid in g r e al e sta te d ata ( fo r e xa m ple , w ww.r e alt o r.c o m , w ww.z il lo w .c o m ) a n d c h o ose h o m e t y p e “ h o use s f o r s in g le f a m il y ” ( n o t a n a p artm en t, c o nd o, lo ts ). W e ( ra n d om ly ) s e le ct 3 0 h o use s f r o m M ontg om ery a n d 3 0 h o use s f r o m A ub urn , a n d s a ve t h em in a f il e , h o usin g _d ata _5 8 80_ y o ur n am e.x ls .U se t h e f o llo w in g v a ria b le d esc rip tio n t o c o lle ct t h e d ata . . p ric e . b drm s . s q ft . a g e . p ool . c it y p urc h ase p ric e in $ 10 00s n um ber o f b ed ro om s s iz e o f h o use in s q uare f e et a g e o f h o use = 2 0 19 – y e ar b uil t = 1 if t h e h o use h as a s w im min g p ool = 0 o th erw is e = 1 if t h e h o use is lo cate d in t h e c it y o f M ontg om ery = 0 o th erw is e F ro m t h e w eb sit e y o u m ay s e e t h e f o llo w in g f a c ts :
O bs 1 ) 4 b ed s, 3 b ath s, 2 76 2 s q uare f e et B uil t in 1 9 8 8 N o s w im min g p ool S ale P ric e : $ 26 4,9 00 A ddre ss : X XXX, M ontg om ery , A L O bs 2 ) 4 b ed s, 3 b ath s, 2 222 s q uare f e et B uil t in 2 0 13 S w im min g p ool S ale P ric e : $ 350 000 A ddre ss : X XXX, A ub urn , A L T he c o lle cte d d ata s e t s h o uld b e s a ve d in t h e f o llo w in g f o rm at: o b s p ric e b drm s s q ft a g e p ool c it y 1 2 6 4.9 = 2 6 4 000/1 0 00 4 2 76 2 3 1 = 2 0 19 -19 8 8 0 1 2 3 50 4 2 222 4 1 0 … P art 2 ) R eg re ss io n A naly sis w it h E xc e l Y o u c an e m plo y r e g re ss io n a n aly sis w it h E xc e l t o e stim ate h o use p ric e s b ase d o n 6 0 o b se rv a tio ns.
S te p 1 ) D esc rib e r e g re ss io n a n aly sis b rie fly . W hat is t h e r e aso n t h at y o u a re d oin g t h e r e g re ss io n a n aly sis ? W hat a re t h e t h in g s t h at y o u c an f ig ure o ut b ase d o n y o ur a n aly sis ?
S te p 2 ) E stim ate t h e f o llo w in g m od el a n d a n sw er f o r e ac h q uestio n.
1 . M od el 1 : p ric e = + $ + * + / + A c o up le is lo okin g f o r a h o use a n d c o m parin g p ric e s b etw een M ontg om ery a n d A ub urn .
S pecif ic ally , t h ey w ould lik e t o k n ow w heth er b ein g lo cate d in a s p ecif ic c it y t e n d s t o in cre ase o r d ecre ase t h e p ric e o f a h o use a n d w heth er t h e e ffe ct is s ta tis tic ally s ig nif ic an t. P ro vid e t h em w it h s o m e g uid an ce b ase d o n t h e q uan tit a tiv e e vid en ce f r o m y o ur E X C EL e stim atio n.
2 . M od el 2 : p ric e = + $ + * + / + 3 + A ss u m e t h at t h e c o up le is c o nsid erin g a h o use w ho se s iz e is a b out 3 0 00 s q uare f e et, r e la tiv e ly n ew ( b uil t in 2 0 10 ), lo cate d o n M ontg om ery w it h a p ool f o r t h eir c h il d re n . T hey w ould lik e t o k n ow t h e e xp ecte d p ric e o f t h e h o use . E stim ate t h e f o llo w in g m od el a n d p ro vid e t h em s o m e w it h g uid an ce b ase d o n t h e q uan tit a tiv e e vid en ce f r o m y o ur E X C EL e stim atio n.
S te p 3 ) T o e xp la in t h e p urc h asin g p ric e o f t h e h o use b ette r, w hat w ould b e a d dit io nal v a ria b le s t h at c o uld b e a d ded t o m od el 2 ? W rit e d ow n t h e v a ria b le n am e a n d d esc rip tio n.
P art 3 ) R ep ort o n t h e p ro je ct S te p 1 ) W rit e -u p : S ub m it a 4 p ag e w rit e -u p ( in clu d in g 1 p ag e o f t a b le r e su lt ) t o e xp la in t h e d eta il s a p pear in y o ur p ro je ct ( U se 1 2 p oin ts w it h d oub le s p ac in g ).
1 P ro b le m S ta te m en t 10/3/21, 11:44 PM INFO 5880 file:///Users/jaswanthgarudachedu/Downloads/Research Project 5880.html 2/2 1 .1 P urp ose o f t h e p ro je ct e .g ., T hro ug h t h is p ro je ct, I w ould lik e t o e xa m in e t h e r e la tio nsh ip b etw een t h e p urc h asin g p ric e o f t h e h o use a n d p oss ib le f a c to rs a ffe ctin g t h e p ric e .
1 .2 R easo ns f o r u sin g t h e e m pir ic a l m eth od olo g y : D esc rib e r e g re ss io n a n aly sis b rie fly . W hat is t h e r e aso n t h at y o u a re d oin g t h e r e g re ss io n a n aly sis ? W hat a re t h e t h in g s t h at y o u c an f ig ure o ut b ase d o n y o ur a n aly sis ?
2 E m pir ic a l A naly sis 2 .1 D ata S ourc e a n d D esc rip tio n : U se t h e d ata c o rre ctio n in p art 1 .
2 .2 S ca tte r P lo t : d ra w s c atte r p lo ts b etw een t h e d ep en d en t v a ria b le a n d t h e in d ep en d en t v a ria b le s, a n d d is c u ss t h e r e la tio nsh ip b etw een t h e v a ria b le s.
3 . A ppli c a tio n 3 .1 E stim atio n: E ffe ct o f c it y M od el 1 : D is c u ss t h e s it u atio n d esc rib ed in t h e q uestio n a n d e stim ate d r e su lt s o f m od el 1 in S te p 2 .
3 .2 E stim atio n: E ffe ct o f p ool M od el 2 : D is c u ss t h e s it u atio n d esc rib ed in t h e q uestio n a n d e stim ate d r e su lt s o f m od el 2 in S te p 2 .
4 . C onclu sio n S um mariz e y o ur e m pir ic al r e su lt s c o ncis e ly . W hat is s o m eth in g y o u d id in t h e p ro je ct? D is c u ss b rie fly t h e lim it a tio n o f y o ur a n aly sis . : U se t h e r e su lt in S te p 3 t o d is c u ss t h e lim it a tio n.
A ppen d ix . E m pir ic a l E vid en ce I n clu d e t h e t a b le ( c o py o f E xc e l s p re ad sh eet) a t t h e e n d o f t h e w rit e -u p .
