ASSIGNMENT # 2

Submitted by: Rehana Anwar PM 121008 Submitted to: Dr. Anwar F. Chishti

Department of Social and Management Sciences Muhammad Ali Jinnah University, Islamabad

1. Briefly explain (in bullet-points) what the major contribution is that of simple/twovariables regression model, and why we have to resort to multiple regression analysis. The two variables regression model evaluation is carried out by using following criteria. Economic/management theory criteria (expected signs carrying with the coefficients of X-variables) Statistical theory criteria (t statistic or p-value, F statistic, and R2) Econometric theory criteria (Autocorrelation, Heteroscadasticity & Multicollinearity) On the basis of these criteria the results turn out to be reasonably acceptable. But this simple regression model provides biased results as it does not include some very important and relevant explanatory variables. So solution lies in the Multiple Regression Analysis, where in all relevant explanatory variables need to be included.

2. Go through the steps suggested for estimation of a linear-regression model; what is the
difference between a linear and log-linear model? (a) How do the steps of estimation of a log-linear model differ from that of linear model? (b) How do the interpretations of the two model differ? Steps to be taken for estimation of a linear-regression model Develop a questionnaire, and then collect the data Enter the collected data in SPSS Estimate reliability test (Chronbachs Alpha) of the raw-data Interpret the results of reliability test Generate data on variables of interest Run regression model and report the results

In linear model we run regression on nominal data, while in log linear model we take log of all the data for the consistency of whole data. a) There is no difference in the estimation of linear model and log linear model except in log linear model we take log of all the values. b) The results of one model can't be compared with the other model. However we expect relatively better results from a log linear model, so we discuss whether the results have improved or not.

3. What is reliability? How is reliability test run in SPSS? Why is the running of
reliability test important? Reliability test can be assessed as, 1. Statistic used to determine repeatability 2. Number ranges between 0 and 1 3. Always positive 4. Closer to one is greater reliability 5. Closer to 0 is less reliability 6. Generally looking for values greater than .8 Procedure 1. On the menu bar of the SPSS Data Editor window, click Analyze > Scale > Reliability Analysis 2. Select two or more variables that you want to test by clicking on the variable label in the Reliability Analysis dialog box. To select multiple variables, hold down the Ctrl key and choose the variables you want. Click on the arrow button to add selected variables to the item's window. 3. Click on the Statistic button to select descriptive, summaries, enter-item, and ANOVA statistics. Click on the Continue button. 4. Click the OK button in the Reliability Analysis dialog box to run the analysis. The output will be displayed in a separate SPSS Viewer window. The Reliability Analysis procedure calculates a number of commonly used measures of scale reliability and also provides information about the relationships between individual items in the scale. Intra-class correlation coefficients can be used to compute reliability estimates.

4. What is the procedure of generating data on variables of interest? How is a Likertscale questionnaire used for generation of data on variables of interest? 1. Collect the relevant data for the research topic. 2. Choose the dependent and independent variables or whatsoever need for the study. 3. Choose a research instrument to collect data e.g Questionnaire.

4. Questions are developed separately for all the variables that are being considered for the study to collect data. 5. Then these questions are evaluated by entering the data into SPSS.

Likert scale is a type of questionnaire which measures the data. It contains a range 2 to 7. As questions are being asked in the range form, the respondents select any number which he/she considers appropriate.

6. How are and for what purposes, F-statistic, R2 and t-statistic/p-values used for the
evaluation and interpretation of estimated models?

F-statistic is a value resulting from a standard statistical test used in ANOVA and regression analysis to determine if the variances between the means of two populations are significantly different. For practical purposes, it is important to know that this value determines the P-value. F-test for testing significance of regression is used to test the significance of the regression model. The appropriateness of the multiple regression model as a whole can be tested by this test. A significant F indicates a linear relationship between Y and at least one of the Xs. P-value is the significance level as to what extent the variables chosen are significant or insignificant. As if the value is less than 5% or 1% then the variable is highly significant. R-squared, often called the coefficient of determination, is defined as the ratio of the sum of squares explained by a regression model and the "total" sum of squares around the mean R2 = 1 - SSE / SST Regression analysis programs also calculate an "adjusted" R-square. The best way to define this quantity is: R2adj = 1 - MSE / MST since this emphasizes its natural relationship to the coefficient of determination.

While R-squared will never increase when a predictor is dropped from a regression equation, the adjusted R-squared may be larger. Specifically, if the t-ratio for a predictor is less than one, dropping that predictor from the model will increase the adjusted Rsquared. Sometimes you will come across an article in which the researcher keeps everything with a t bigger than 1 in the model. The motivation for doing that is to get as large an adjusted R-squared as possible. Note that the one-sided P-value for t = 1 is .16 in large samples, quite large compared to the conventional hypothesis testing standards of .05 or .01.