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Explainati On Interpretation of STATA Regression Output BY DR, Wahid Sherani

The regression output shows the results of a linear regression model with the dependent variable 'price' and independent variables 'mpg', 'rep78', 'weight', 'length', and 'displacement' of cars. The model is statistically significant and the independent variables explain around 45% of the variation in 'price'. The coefficients and their statistical significance are also explained.

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78 views

Explainati On Interpretation of STATA Regression Output BY DR, Wahid Sherani

The regression output shows the results of a linear regression model with the dependent variable 'price' and independent variables 'mpg', 'rep78', 'weight', 'length', and 'displacement' of cars. The model is statistically significant and the independent variables explain around 45% of the variation in 'price'. The coefficients and their statistical significance are also explained.

Uploaded by

sherani wahid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Interpretation of STATA-Regression Output

(Dr. Wahid SherAni )

The provided regression output shows the results of a multiple linear regression model with
the dependent variable "price" and the independent variables "mpg" (miles per gallon),
"rep78" (repair record from 1 to 5), "weight", "length" of cars and "displacement

EXPLANATION OF THE KEY COMPONENTS OF THE REGRESSION OUTPUT

1. Number of observations:

The regression is performed on 69 observations.

2. F-statistic and p-value (F(5, 63) = 10.33, Prob > F = 0.0000:

The F-statistic tests the overall significance of the regression model. The p-value is
less than 0.05, indicating that the model is statistically significant, meaning that at least
one of the independent variables has a significant effect on the dependent variable "price".

3. R-squared (R-squared = 0.4505): The R-squared value is 0.4505, which means that the
independent variables in the model explain 45.05% of the variation in the dependent variable
"price".

4. Adjusted R-squared (Adj R-squared = 0.4069): The adjusted R-squared takes into
account the number of independent variables in the model and is a more accurate measure of
the model's goodness of fit. It indicates that 40.69% of the variation in "price" is explained by
the independent variables.

5. Root Mean Squared Error (Root MSE = 2243): The Root MSE is the standard deviation
of the residuals, which represents the average distance of the observed values from the
predicted values.

6. Regression Coefficients:

A. Price & mpg:

• The coefficient for "mpg" is -107.6681.


• which means that a one-unit increase in "mpg" is associated with a decrease of
107.6681 in the "price", holding all other variables constant.
• However, this coefficient is not statistically significant (p-value = 0.190).

B. Price & rep78:

• The coefficient for "rep78" is 943.1564.


• which means that a one-unit increase in "rep78" (better repair record) is associated
with an increase of 943.1564 in the "price", holding all other variables constant.
• This coefficient is statistically significant (p-value = 0.003).

C. Price & weight:

• The coefficient for "weight" is 3.920286.


• Which means that a one-unit increase in "weight" is associated with an increase of
3.920286 in the "price", holding all other variables constant.
• This coefficient is statistically significant (p-value = 0.014).

D. Price & length:

• The coefficient for "length" is -108.6199.


• Which means that a one-unit increase in "length" is associated with a decrease of
108.6199 in the "price", holding all other variables constant.
• This coefficient is statistically significant (p-value = 0.007).

E. Price & displacement :


• The coefficient for "displacement" is 8.000397.
• which means that a one-unit increase in "displacement" is associated with an increase
of 8.000397 in the "price", holding all other variables constant.
• However, this coefficient is not statistically significant (p-value = 0.334).

Cons (Constant): The constant term is 12207.61, which represents the predicted value of
"price" when all the independent variables are equal to 0.

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