# Statistics: An Introduction to Quantitative Economic Research

By Daniel B. Suits | Go to book overview

CHAPTER VII
The Function as an Equation I: Simple Linear Regression

7.1 INTRODUCTION

Tabulation has two serious limitations. In the first place, even when data have been tabulated, it is often necessary to represent the relationship, at least approximately, by an equation. A table is poorly adapted for the study of elasticities, marginal productivities, multipliers, and other quantitative aspects of economic functions. Much modern research, for example the construction of econometric models, requires that relationships be expressed by simple mathematical formulas. Secondly, tabulation requires a substantial amount of data. A small sample puts a severe limit to the number of cells that can be explored, even when the function is restricted to a single independent variable.

Linear regression is a method of approximating a statistical function by a simple linear equation. Moreover, because of its relative simplicity, it can be usefully applied even to samples too small to tabulate. These two points are illustrated by Tables 7.1 and 7.2 and the accompanying charts.

Table 7.1 contains family beef consumption tabulated as a function of income. The small standard errors indicate that the function is measured with considerable precision, and when plotted in Figure 7.1, the cell means fit tightly to a smooth curve. Although the equation of this curve is complicated, it can be usefully approximated by a straight line. What the linear approximation loses in ability to describe detail is made up, in part at least, by the simplicity of its equation.

Table 7.2 contains the total annual production and the farm price of onions for each of 11 years. Detailed tabulation of onion demand is

-155-

### Notes for this page

If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

#### Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.
Citations (0)
Some of your citations are legacy items.
Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
• Saved book/article
• Highlights
• Quotes/citations
• Notes
• Bookmarks
Notes
Cite this page

#### Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

#### Cited page

Bookmark this page
Statistics: An Introduction to Quantitative Economic Research
Table of contents

Settings

Typeface
Text size
Search within

Look up

#### Look up a word

• Dictionary
• Thesaurus
Please submit a word or phrase above.
Print this page

#### Print this page

Why can't I print more than one page at a time?

Full screen
/ 260

## Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

## Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

## Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.