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Practical Regression: From "Stylized Facts" to Benchmarking


This is the eleventh in a series of lecture notes which, if tied together into a textbook, might be entitled “Practical Regression.” The purpose of the notes is to supplement the theoretical content of most statistics texts with practical advice based on nearly three decades of experience of the author, combined with over one hundred years of experience of colleagues who have offered guidance. As the title “Practical Regression” suggests, these notes are a guide to performing regression in practice. 
Using an extended example on hospital lengths of stay, the note explains how to "deconstruct" a regression in order to parse out how each variable contributes to the overall result. Regression is viewed as an exercise in "benchmarking"—explaining why some observations in the data "outperform" or "underperform" others. The residual is viewed as a potential measure of managerial effectiveness, albeit one that must be treated with caution. The note provides step-by-step instructions for using regression for benchmarking.




David Dranove

Date Published


Dranove, David. Practical Regression: From "Stylized Facts" to Benchmarking. Case 7-112-011 (KEL645).


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