For this reason, the value of R will always be positive and will range from zero to one. In multiple linear regression, the R2 represents the correlation coefficient between the observed values of the outcome variable (y) and the fitted (i.e., predicted) values of y. The confidence interval of the model coefficient can be extracted as follow: confint(model) # 2.5 % 97.5 %Īs we have seen in simple linear regression, the overall quality of the model can be assessed by examining the R-squared (R2) and Residual Standard Error (RSE). # F-statistic: 860 on 2 and 197 DF, p-value: <2e-16įinally, our model equation can be written as follow: sales = 3.5 + 0.045*youtube + 0.187*facebook. # Multiple R-squared: 0.897, Adjusted R-squared: 0.896 # Residual standard error: 2.02 on 197 degrees of freedom This means that, for a fixed amount of youtube and newspaper advertising budget, changes in the newspaper advertising budget will not significantly affect sales units.Īs the newspaper variable is not significant, it is possible to remove it from the model: model |t|) We found that newspaper is not significant in the multiple regression model. The youtube coefficient suggests that for every 1 000 dollars increase in youtube advertising budget, holding all other predictors constant, we can expect an increase of 0.045*1000 = 45 sales units, on average. It can be seen that, changing in youtube and facebook advertising budget are significantly associated to changes in sales while changes in newspaper budget is not significantly associated with sales.įor a given predictor variable, the coefficient (b) can be interpreted as the average effect on y of a one unit increase in predictor, holding all other predictors fixed.įor example, for a fixed amount of youtube and newspaper advertising budget, spending an additional 1 000 dollars on facebook advertising leads to an increase in sales by approximately 0.1885*1000 = 189 sale units, on average. # newspaper -0.00104 0.00587 -0.177 8.60e-01įor a given the predictor, the t-statistic evaluates whether or not there is significant association between the predictor and the outcome variable, that is whether the beta coefficient of the predictor is significantly different from zero. In our example, it can be seen that p-value of the F-statistic is |t|) The first step in interpreting the multiple regression analysis is to examine the F-statistic and the associated p-value, at the bottom of model summary.
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