The Population Regression Model
In Unit 2, we studied the sample regression line as a description of a dataset. Now we consider the population model:
where:
- = population y-intercept (true intercept)
- = population slope (the parameter of interest)
- = error term (random variation around the true line)
Conditions for regression inference (LINE):
- Linear: The true relationship between and is linear
- Independent: Observations are independent
- Normal: For each value of , the values are normally distributed around the true line
- Equal variance: The standard deviation of is the same for all (homoscedasticity)
The sample slope is an estimate of the population slope .