Multiple Regression

Abstract

In most practical situations, it would be unrealistic to expect the behaviour of an economic or socio-economic variable to be adequately explained by changes in just one explanatory variable. For example, the demand for a product may be a function not only of that product’s price, but also of the prices of competing products, of income, possibly of advertising expenditure, and other variables. The two models we considered in the previous chapter are further examples. Household expenditure is likely to be a function not only of household income, but also of household size, household age, socio-economic class, etc., and the number of divorces is likely to be a function of more than just female employment; male employment, the level of child care and family support, the age at first marriage, whether married before, number of children, etc. are all possible candidates as explainers of divorce rates.