Examining assumptions and limitations.
3 posts
Blue book values, as mentioned in the last post, are derived from regression statistics. And regressions assume a normal distribution around the mean. Single values that are too far off the mean cause the “line of best fit” to be skewed–the angle of the line is thrown off. These “outliers” have to be removed from…
Regression is often used to simplify our understanding of how one variable affects another. Insurance, credit scores, and even car values are estimated using regression formulas. These are powerful statistical tools that allow us to look at hundreds, thousands, even millions of cases (for example, car sales) and extrapolate a “line of best fit” to…
What’s the difference? We all know what zero is. It’s a number, and yet it’s not a number. If we are counting, it means “none” of something. Zero is one less than one. Zero is the amount we want to owe on our taxes on April 15. Zero is the balance we want to see…