Fox Module 13: Dummy variable regression HW


Fox Module 13: Dummy variable regression HW

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smh1021
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In setting up the dummy variables to use for the Excel regression, is it always appropriate to use an average value for Y?  For example, in this case I was going to set up Excel to perform the regression as follows.

CategoryAvg. YD1D2
Urban15.18%10
Suburban12.50%01
Rural9.54%00

I do not see how you could look at all the Y values individually since you only have two dummy variables and a default. Is this the correct approach to this problem or does the number of territories that each group was sampled from (5) need to be taken into account somehow?

[NEAS: Use the average values.

Jacob: Do we use dummy variables for urban, sub-urban, and rural, or dummy variables for each territory?

Rachel: This homework assignment assumes we group the territories into three categories: urban, sub-urban, and rural. If the insurer believed that each territory has a different claim frequency, it might use dummy variables for each territory. ]


NEAS
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For Excel 2010, here are instructions for loading the analysis toolpak:

The Analysis ToolPak is a Microsoft Excel add-in (add-in: A supplemental program that adds custom commands or custom features to Microsoft Office.) program that is available when you install Microsoft Office or Excel. To use it in Excel, however, you need to load it first.

  1. Click the File tab, and then click Options.
  2. Click Add-Ins, and then in the Manage box, select Excel Add-ins.
  3. Click Go.
  4. In the Add-Ins available box, select the Analysis ToolPak check box, and then click OK.
    1. Tip    If Analysis ToolPak is not listed in the Add-Ins available box, click Browse to locate it.
    2. If you get prompted that the Analysis ToolPak is not currently installed on your computer, click Yes to install it.
  5. After you load the Analysis ToolPak, the Data Analysis command is available in the Analysis group on the Data tab.

 Note   To include Visual Basic for Application (VBA) functions for the Analysis ToolPak, you load the Analysis ToolPak - VBA add-in the same way that you load the Analysis ToolPak. In the Add-ins available box, select the Analysis ToolPak - VBA check box, and then click OK.

Once the analysis toolpak is loaded, click on Data Analysis in the Analysis group and then on Regression. The screen that comes up asks for the cells with X-values and Y-values and the cells in which the ouput should be placed.


noturbizniss
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Got exactly those numbers.
Michelle2010
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I did an excel regression with 2 variables: D1, D2.  I didn't treat territory as an explanatory variable but rather as a category (like the occupational types on page 125).

I came up with

Y = A + B1D1 + B2D2 = .0954 + .0564*D1 + .0296 * D2

Did anyone come up with anything similar to this?


noturbizniss
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Is the answer for C supposed to be in the format:
Y Hat = a + bX +G1D1+G2D2?

Do we just do an excel regression with 3 variables (territory, D1 and D2)?
A.non
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Rachel: We do this is the territory number has a quantitative value.

 

I believe this is intended to say "We would do this if the territory numbers had quantitative value."


CalLadyQED
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See the PDF that NEAS posted on the Module 14 HW thread. I'd suggest googling "regression in excel." Also, I'm finding _Statistics with Microsoft Excel_ by Beverly J. Dretzke very helpful.
CalLadyQED
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NEAS, thanks for adding the additional explanation. Unfortunately, I'm having trouble understanding Rachel's answer. There appears to be a grammatical error in the first sentence, but I cannot figure out what it is supposed to say. Could you please correct this?
wangxy
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Can any one please tell me how to use excel to run regression.

[NEAS: Excel help says: “Use the Analysis ToolPak to perform complex data analysis: If you need to develop complex statistical or engineering analyses, you can save steps and time by using the Analysis ToolPak. You provide the data and parameters for each analysis, and the tool uses the appropriate statistical or engineering macro functions to calculate and display the results in an output table. Some tools generate charts in addition to output tables. To use the Analysis ToolPak, click Data Analysis in the Analysis group on the Data tab. If the Data Analysis command is not available, you need to load the Analysis ToolPak add-in program.” The Analysis TookPak is explained (somewhat) in the on-line help facility. The exhibits and graphics produced are the same as those in the Fox textbook.]


ian_pogi
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In letter C and using Fox's notation Yi = α + βXi + γ1Di1 + γ2Di2, what will be the Xi here? Is it Xi = 1?

[NEAS: The posting is updated to clarify the notation.]


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