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 (notes and slides)
  • Per-unit manufacturing costs
  
  
• Polling


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

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

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

• Group Assignment (evening, 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
    
    
• Practice
  
  
  • Banner advertising
  • Boston housing prices
  
  

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