Poli 5D Social Science Data Analytics Regression in Stata Shane - PowerPoint PPT Presentation

Poli 5D Social Science Data Analytics Regression in Stata Shane Xinyang Xuan ShaneXuan.com February 10, 2017 ShaneXuan.com 1 / 10

Contact Information Shane Xinyang Xuan xxuan@ucsd.edu The teaching staff is a team! Professor Roberts M 1600-1800 (SSB 299) Jason Bigenho Th 1000-1200 (Econ 116) Shane Xuan M 1100-1150 (SSB 332) Th 1200-1250 (SSB 332) Supplemental Materials UCLA STATA starter kit http://www.ats.ucla.edu/stat/stata/sk/ Princeton data analysis http://dss.princeton.edu/training/ ShaneXuan.com 2 / 10

Road map Some quick notes before we start today’s section: – Make sure that you pass around the attendance sheet – Open a .do file – Import your data (“h1 fams data.xlsx”) – I will be using my slides, and you will need to type the code in your .do file ShaneXuan.com 3 / 10

Regression: Examples! Figure: Data points ShaneXuan.com 4 / 10

Regression: Examples! Figure: Bad fit ShaneXuan.com 4 / 10

Regression: Examples! Figure: Good fit ShaneXuan.com 4 / 10

Model – Population y i = β 0 + β 1 x i ShaneXuan.com 5 / 10

Model – Population y i = β 0 + β 1 x i – Estimation y i = ˆ β 0 + ˆ ˆ β 1 x i + ˆ e i ShaneXuan.com 5 / 10

Model – Population y i = β 0 + β 1 x i – Estimation y i = ˆ β 0 + ˆ ˆ β 1 x i + ˆ e i – (You don’t need to memorize this) Regression Coefficient is calculated by � i ( x i − x )( y i − y ) ˆ β 1 = � i ( x i − x ) 2 ShaneXuan.com 5 / 10

Interpretation of regression coefficient Suppose we have the model y = ˆ β 1 x 1 + ˆ β 2 x 2 + ˆ β 0 + ˆ e ShaneXuan.com 6 / 10

Interpretation of regression coefficient Suppose we have the model y = ˆ β 1 x 1 + ˆ β 2 x 2 + ˆ β 0 + ˆ e ◮ A 1-unit change in x 1 is associated with a β 1 -unit change in y , all else equal. ShaneXuan.com 6 / 10

Interpretation of regression coefficient Suppose we have the model y = ˆ β 1 x 1 + ˆ β 2 x 2 + ˆ β 0 + ˆ e ◮ A 1-unit change in x 1 is associated with a β 1 -unit change in y , all else equal. ◮ A 1-unit change in x 2 is associated with a β 2 -unit change in y , all else equal. ShaneXuan.com 6 / 10

Application ◮ Suppose consumption ( cons ) is a function of family income ( inc ): cons = β 0 + β 1 inc + u where u contains other factors affecting consumption. What change do you expect to see in cons with a two-unit increase in inc ? ShaneXuan.com 7 / 10

Application ◮ Suppose consumption ( cons ) is a function of family income ( inc ): cons = β 0 + β 1 inc + u where u contains other factors affecting consumption. What change do you expect to see in cons with a two-unit increase in inc ? ◮ With a two-unit increase in inc, ShaneXuan.com 7 / 10

Application ◮ Suppose consumption ( cons ) is a function of family income ( inc ): cons = β 0 + β 1 inc + u where u contains other factors affecting consumption. What change do you expect to see in cons with a two-unit increase in inc ? ◮ With a two-unit increase in inc, cons = β 0 + β 1 ( inc + 2) + u = β 0 + ( β 1 inc + 2 β 1 ) + u = ( β 0 + β 1 inc + u ) + 2 β 1 ShaneXuan.com 7 / 10

Application ◮ Suppose consumption ( cons ) is a function of family income ( inc ): cons = β 0 + β 1 inc + u where u contains other factors affecting consumption. What change do you expect to see in cons with a two-unit increase in inc ? ◮ With a two-unit increase in inc, cons = β 0 + β 1 ( inc + 2) + u = β 0 + ( β 1 inc + 2 β 1 ) + u = ( β 0 + β 1 inc + u ) + 2 β 1 Thus, we see a 2 β 1 increase in cons with a 2-unit increase in inc ! ShaneXuan.com 7 / 10

Code ◮ Scatter plot: twoway (scatter povertyratio mom age mom, mlabsize(tiny) msize(tiny)) ShaneXuan.com 8 / 10

Code ◮ Scatter plot: twoway (scatter povertyratio mom age mom, mlabsize(tiny) msize(tiny)) ◮ Regression: regress povertyratio mom age mom ShaneXuan.com 8 / 10

Code ◮ Scatter plot: twoway (scatter povertyratio mom age mom, mlabsize(tiny) msize(tiny)) ◮ Regression: regress povertyratio mom age mom ◮ Visualization: twoway (scatter povertyratio mom age mom, mlabsize(tiny) msize(tiny)) (lfit povertyratio mom age mom) ShaneXuan.com 8 / 10

Code ◮ Scatter plot: twoway (scatter povertyratio mom age mom, mlabsize(tiny) msize(tiny)) ◮ Regression: regress povertyratio mom age mom ◮ Visualization: twoway (scatter povertyratio mom age mom, mlabsize(tiny) msize(tiny)) (lfit povertyratio mom age mom) ShaneXuan.com 8 / 10

Residuals ◮ Fitted values ShaneXuan.com 9 / 10

Residuals ◮ Fitted values – Manually: gen fitted = -1.091357 + .1305531 * age mom ShaneXuan.com 9 / 10

Residuals ◮ Fitted values – Manually: gen fitted = -1.091357 + .1305531 * age mom – Stata command: predict fv ShaneXuan.com 9 / 10

Residuals ◮ Fitted values – Manually: gen fitted = -1.091357 + .1305531 * age mom – Stata command: predict fv ◮ Residuals ShaneXuan.com 9 / 10

Residuals ◮ Fitted values – Manually: gen fitted = -1.091357 + .1305531 * age mom – Stata command: predict fv ◮ Residuals – Manually: gen resid = povertyratio mom - fv ShaneXuan.com 9 / 10

Residuals ◮ Fitted values – Manually: gen fitted = -1.091357 + .1305531 * age mom – Stata command: predict fv ◮ Residuals – Manually: gen resid = povertyratio mom - fv – Stata command: predict e, residual ShaneXuan.com 9 / 10

Residuals ◮ Fitted values – Manually: gen fitted = -1.091357 + .1305531 * age mom – Stata command: predict fv ◮ Residuals – Manually: gen resid = povertyratio mom - fv – Stata command: predict e, residual Figure: Similar results for fitted values, and residuals ShaneXuan.com 9 / 10

What else can you do using regressions? ◮ Suppose you run a regression of y on x 1 , and get an error term ˆ e. You can then do a scatterplot of error term ( ˆ e ) and a different variable ( x 2 ) to see how much of the difference can be explained by this variable: ShaneXuan.com 10 / 10

What else can you do using regressions? ◮ Suppose you run a regression of y on x 1 , and get an error term ˆ e. You can then do a scatterplot of error term ( ˆ e ) and a different variable ( x 2 ) to see how much of the difference can be explained by this variable: – twoway scatter e x 2 ShaneXuan.com 10 / 10

What else can you do using regressions? ◮ Suppose you run a regression of y on x 1 , and get an error term ˆ e. You can then do a scatterplot of error term ( ˆ e ) and a different variable ( x 2 ) to see how much of the difference can be explained by this variable: – twoway scatter e x 2 ◮ You can do a multiple regression ShaneXuan.com 10 / 10

What else can you do using regressions? ◮ Suppose you run a regression of y on x 1 , and get an error term ˆ e. You can then do a scatterplot of error term ( ˆ e ) and a different variable ( x 2 ) to see how much of the difference can be explained by this variable: – twoway scatter e x 2 ◮ You can do a multiple regression – regress y 1 x 1 x 2 ... ShaneXuan.com 10 / 10