Lecture 2_Part3

Lecture 2_Part3 - Correlation & Covariance SUNY at...

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SUNY at Albany - Department of Economics Eco 320 • Economic Statistics Correlation & Covariance
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1. Scatterplot o A scatterplot shows the relationship between two quantitative variables measured on the same individuals. The values of one variable appear on the horizontal axis, and the values of the other variable appear on the vertical axis. Each individual in the data appears as the point in the plot fixed by the values of both variables for that individual. • Explanatory variable, x • Response variable, y • A good practice is to always plot the explanatory variable on the horizontal axis (the x axis) of a scatterplot. If there is no explanatory- response distinction, either variable can go on the horizontal axis. SUNY at Albany - Department of Economics Eco 320 • Economic Statistics
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[Example] Health and Wealth SUNY at Albany - Department of Economics Eco 320 • Economic Statistics
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1. Scatterplot A. The overall pattern of a scatterplot can be described by the direction, form, and strength of the relationship. Direction Positive association: life expectancy (y) generally goes up as GDP (x) increases. The scatterplot slopes upward as we move from left to right. Negative association: y decreases as x goes up. The scatterplot
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Lecture 2_Part3 - Correlation & Covariance SUNY at...

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