## Session 3: Correlation; Regression Modeling (Variable Selection, Nonlinearities)

- Correlation (slides)

  - Detailed notes on correlation (recommended, but optional)

- Regression Modeling
  - Variable selection (slides)
  - Structural variations (2)
  - Nonlinearities (slides)
  - Per-unit manufacturing costs

- Assignment (after Session 3)

  - Work through the "Real Estate" sample exam (skip question (6) for now).

- Sample exam
  - Email sent out with dataset several days before exam
  - "Real estate" dataset and description
  - Exam questions
  - Exam answers
- Exercises
  - Banner advertising
  - Boston housing prices

- Applications
  - Examples (slides) from the NBER Digest (May 2005)
    - Domestic terrorism (nonlinearity)
    - CEO overconfidence (interaction)
    - Drug abuse (specification bias)
- Polling

- Market surveys, political and opinion polls (slides)
- A Primer on Polls
- Presidential election polls

- Summary: The Languages of Estimation and Hypothesis Testing
- Summary: Modeling Tricks