Curtis Miller MATH 3080 Final Project pg.

1
Curtis Miller
4/10/14
MATH 3080
Final Project

Problem 1: Car Data
The first question asks for an analysis on car data. The data was collected from the Kelly
Blue Book by S. Kiuper in 2008, and included a number of variables on 2005 General Motors
vehicles, including: vehicles suggested price; the number of miles the vehicle has been driven
(mileage); the manufacturer of the vehicle (make); the model of the vehicle; the specific type of
car model of the vehicle (trim); the body type; the number of cylinders the vehicle has in the
engine; the engine size (liter); the number of doors; whether the vehicle has cruise control;
whether the vehicle has upgraded speakers; and whether the vehicle has leather seats. I
developed linear regression models to try to describe the price of the vehicle as a function of
other variables.
My first model was a simple linear regression model that did not transform the data
other than to turn certain categorical variables (make, model, trim, type, cruise, sound, and
leather) into dummy variables in the model. In the case of cruise, sound, and leather, there is
only one dummy variable in the model that takes the value 1 if the respective condition is met
and 0 otherwise. Make, model, trim, and type are much more complex, and a dummy is created
for each of the possible conditions save 1 (so there are dummy variables for all but one make of
car, for example). The coefficients of all the variables are then estimated, and the resulting
model analyzed. All estimated models for the car data are listed in Table 1.
The coefficients for the type dummy variables and liters could not be estimated, and
were dropped by the R statistical package. Those variables must have been linearly dependent
on other variables in the model. A number of coefficients are statistically different from zero,
and of all the models, model 1 has the highest adjusted

. But the diagnostic plots (Figure 2) of

Curtis Miller MATH 3080 Final Project pg. 2
the model show that model 1 does not fit the Gauss-Markov assumptions of linear regression
very well. The plot of residuals vs. fitted values shows that the variance of the residuals is not
constant, and the residuals are not independent of the fitted values. The Q-Q plot of the
residuals suggests that they are not normally distributed, which violates another vital
assumption. The plot of residuals vs. leverage indicates that there are influential datapoints. The
residual vs. index plot shows that there are a few very large residuals, which is troubling. The
residual vs model plot and the residual vs mileage plot indicate that the variance of the residuals
is not independent of two important variables. But the actual vs. predicted price is fairly linear,
which indicates that linear relationships are probably appropriate. These factors together
suggest that the first model has problems. I create my other models to try to rectify these
problems.
For model 2, I took a different approach when choosing which variables to include.
Using Figure 1, I examined the scatterplots of the variables plotted against each other along with
their correlation coefficients. I concluded that some of the variables were too similar to each
other, raising a problem with multicollinearity, so I decided to drop some variables that
appeared to be redundant. Those variables included doors and cylinders. After examining the
coefficients for the variables in model 1, I decided that trim did not contribute much to the
model, so I dropped the dummy variables associated with trim as well. All other variables
remained in the model, unmodified.
The adjusted

of the model dropped, but some of the problems that were apparent in
the diagnostic plot of the first model improved, though the model is still not perfect (see Figure
3). The residuals variance is less a function of fitted values than before, and the Q-Q plot of the
residuals suggested they are more normally distributed than before, but there is still
heteroskedasticity in the residuals and they are still not normally distributed. There are still
influential datapoints, as indicated by the residual vs. leverage plot, and the residuals vs. index
Curtis Miller MATH 3080 Final Project pg. 3
plot is still not perfect, but the other plots have improved. Meanwhile, most of the coefficients in
the second model are statistically different from zero, save for the coefficients of cruise and
sound, and leather is statistically significant only at the level. So I felt I should consider
two more models.
The third model I estimated is similar to the second, but I removed the variables for
cruise, sound, and leather. Dropping those variables changed little in the model; no variables
changed level of significance, the adjusted

did not change, and the diagnostic plots (Figure 4)

did not change much. Thus the variables leather, cruise, and sound do not appear to contribute
much to predicting the price of a car.
The fourth model is identical to the third save for mileage; I transformed the mileage
variable, estimating a coefficient for
1
rather than mileage as a linear variable. My
motivation for the change was that I felt that mileage need not have a constant impact on price.
In the other models, a one-unit change in mileage is associated with a

change in price.
But by transforming mileage, the new interpretation of the coefficient is that a 1% change in
mileage is associated with a

change in price (this I learned in econometrics). I found

this more theoretically appealing; the difference in price between the 100
th
and the 200
th
mile
need not be the same as the difference between the 1100
th
and the 1200
th
mile.
However, the fourth model did not fare as well as the second and third models. It has the
lowest adjusted

of all the models, and the diagnostic plots (Figure 5) are not much better
than the diagnostic plots of the third model; while the residuals appear to be somewhat more
homoskedastic and appropriately centered, they are less normal than the residuals of the third
model. Worse, the residual vs. mileage plot became worse; it appears that the variances of the

1
Note that log is the natural log, sometimes denoted ln.
Curtis Miller MATH 3080 Final Project pg. 4
residuals are not independent of mileage. I conclude that the fourth model is not much of an
improvement over the third model.
Given the choice between these four models, I prefer the third. It fits the data reasonably
well, and while it does not fit the assumptions necessary for statistical inference in linear
regression very well, it fares better than any other model estimated. The third model also does
not include variables that have been found to have minimal impact on price (save for some
dummies). Thus I feel that the third model is the best model for predicting price.
Problem 2: Dolphin Data
The second question asks for an analysis of the sound pressure of dolphin sonar signals
compared to the distance (range) from the dolphin to the target. The data is from Marianne
Rasmussen, collected off the coast of Iceland near Keflavik. The pressures were corrected for
water density and were expected to increase with distance.
The first model I estimated was a simple linear model. The equation of the model is:

The estimated regression coefficients are listed in Table 2 (along with the coefficients of all other
regression equations I estimated). As expected, the coefficient for range is positive and
statistically different from zero. However, the adjusted

is not very high. Furthermore, looking

at Figure 6, the assumptions necessary for statistically evaluating the model are violated. The
Q-Q plot of the residuals indicates that the residuals do not appear to be normally distributed,
and there is evidence of heteroskedasticity in the plot of the residuals versus the fitted values.
The plot of residuals vs. index shows there are a few large residuals, but otherwise appears fine.
The residuals vs. range plot, though, shows that the residuals are not independent of range,
which I do not desire.The scatter plot of the data (the red line being the estimated regression
line) not only shows evidence of heteroskedasticity, but suggests that a linear model does not
Curtis Miller MATH 3080 Final Project pg. 5
appear to be appropriate; the data is curved, and the data is more or less likely to fall above or
below the line depending on the range. The plot of actual versus predicted values also shows a
bend rather than a linear fit, providing further evidence that a linear model may not be
appropriate for this data.
This analysis of the linear model suggests that a nonlinear model would provide a better
fit of the data. I consider two alternatives to the linear model: a logarithmic model, and a
quadratic model. The equation of the logarithmic model (the second model) is:

Note that when interpreting the coefficient

in the model, a 1% change in range is associated

with a change of

in the sound pressure. The equation of the quadratic model is:

(There is no simple interpretation of the coefficients of the quadratic model.)
The diagnostic plots for the logarithmic and quadratic models are shown in Figure 7 and
Figure 8, respectively. Both models have similar benefits and pitfalls. Their adjusted

s are
higher than the adjusted

of the linear model (the adjusted

of the logarithmic model being

the highest of them all). The Q-Q plots of the residuals of both models are more normal than the
Q-Q plot of the linear model, but neither are perfect, so the normality assumption does not hold
for either model. Judging by the residual vs. fitted value plots and the residuals vs. range plots,
both models appear to be less heteroskedastic than the linear model, though they are not
perfectly homoskedastic and the quadratic models plot seems to indicate that the distribution of
the residuals in the quadratic model may not be independent of the fitted values. The actual vs.
predicted value plots are much more linear than in the linear model for both models, though the
logarithmic models plot is the most linear of them all. Finally, the scatterplots show that the
Curtis Miller MATH 3080 Final Project pg. 6
estimated equations for the linear and quadratic models have shapes similar to the general
shape of the scatter plot, though the logarithmic model appears to provide the best fit of all
models.
Given the choice between all the models, I feel that the logarithmic model of the data is
the best. Not only does the logarithmic model have the highest adjusted

, its diagnostic plots

are the least problematic of all the models (though not perfect). The linear model is the worst,
and the quadratic model falls in the middle. So I recommend the logarithmic model for
describing the data.
According to the linear model, the predicted sound pressure of a dolphins sonar signal
from a range of nine meters is 207.169 dB. The logarithmic model, in comparison, would predict
a sound pressure of 207.647 dB. Since I prefer the logarithmic model, I believe its prediction to
be better (though the difference between the two is very small).
Curtis Miller MATH 3080 Final Project pg. 7
Appendix: Tables and Figures

Table 1: Regression tables for car prices
Model 1 Model 2 Model 3 Model 4
(Intercept)
26408.03 (514.17)
***
24658.68 (1713.45)
***
24761.12 (1707.75)
***
40869.22 (2077.97)
***

Mileage
-0.19 (0.00)
***
-0.18 (0.01)
***
-0.18 (0.01)
***


Make Cadillac
39454.35 (572.73)
***
30297.33 (719.38)
***
30490.59 (719.13)
***
30184.94 (806.97)
***

Make Chevrolet
-6518.50 (484.13)
***
-4232.57 (461.38)
***
-4243.81 (462.60)
***
-4146.36 (518.58)
***

Make Pontiac
-7952.81 (574.94)
***
-3976.87 (1043.12)
***
-3868.11 (1039.43)
***
-4147.29 (1164.93)
***

Make SAAB
5253.56 (879.93)
***
2980.00 (1042.18)
**
3103.02 (1045.17)
**
2947.59 (1171.56)
*

Make Saturn
-7037.11 (568.86)
***
-5919.03 (647.33)
***
-5957.52 (649.34)
***
-5857.36 (727.86)
***

Model 9_3
-2410.90 (783.76)
**
3616.52 (923.20)
***
3535.74 (925.98)
***
3415.01 (1038.00)
**

Model 9_3 HO
3808.90 (670.55)
***
4650.13 (895.08)
***
4645.06 (897.86)
***
4626.28 (1006.58)
***

Model 9_5
5246.46 (536.60)
***
6248.72 (775.92)
***
6428.74 (775.30)
***
6234.83 (868.91)
***

Model 9_5 HO
5801.01 (782.73)
***
4718.39 (812.42)
***
4878.94 (812.07)
***
4802.66 (910.40)
***

Model AVEO
-6419.73 (437.35)
***
-3753.77 (979.35)
***
-3672.80 (977.58)
***
-4153.52 (1095.24)
***

Model Bonneville
5405.50 (410.77)
***

326.64 (1122.51) 272.45 (1120.88) 596.48 (1256.22)
Model Cavalier
-4420.89 (375.26)
***
-3392.03 (752.12)
***
-3038.35 (740.40)
***
-3337.42 (829.65)
***

Model Century
-7216.45 (404.09)
***
-6441.44 (625.47)
***
-6410.25 (627.75)
***
-6300.84 (703.77)
***

Model Classic
-2892.15 (491.26)
***
-2347.87 (854.20)
**
-2007.48 (845.16)
*
-2276.38 (947.11)
*

Model Cobalt
-3466.84 (376.16)
***
-2386.63 (755.98)
**
-2037.12 (743.19)
**
-2313.26 (832.83)
**

Model Corvette
19642.07 (500.65)
***
10560.64 (1060.94)
***
10638.66 (1064.63)
***
10853.81 (1193.30)
***

Model CST-V
-17632.51 (571.79)
***
-13833.28 (861.43)
***
-13975.70 (862.98)
***
-13601.00 (967.44)
***

Model CTS
-32789.49 (568.84)
***
-22165.54 (1040.36)
***
-22067.12 (1042.23)
***
-21552.46 (1169.35)
***

Model Deville
-29643.86 (571.59)
***
-19919.45 (614.67)
***
-20040.34 (611.81)
***
-19610.94 (686.86)
***

Model G6
4262.34 (558.08)
***

479.31 (939.62) 370.00 (935.59) 519.85 (1048.65)
Model Grand Am -495.74 (576.66)
-3574.18 (719.71)
***
-3372.41 (719.22)
***
-3107.03 (805.93)
***

Model Grand Prix
1735.12 (560.04)
**

-1677.15 (1027.83) -1851.74 (1022.80) -1723.31 (1146.43)
Model GTO
13984.50 (599.27)
***
4514.45 (1761.26)
*
4519.35 (1764.87)
*
5018.34 (1977.92)
*

Model Impala
1095.66 (428.52)
*

380.33 (424.12) 425.67 (424.63) 2.42 (476.00)
Model Ion
-2833.01 (523.98)
***

-569.52 (630.76) -478.48 (620.08) -851.39 (694.49)
Model Lacrosse -348.90 (568.38)
-2202.68 (413.53)
***
-2202.72 (415.02)
***
-2204.77 (465.32)
***

Model Lesabre
-1690.57 (569.23)
**
-3915.49 (448.71)
***
-3912.65 (450.22)
***
-3997.29 (504.62)
***

Model Malibu -608.26 (419.67)
-2225.72 (419.52)
***
-1991.64 (407.58)
***
-2160.24 (456.81)
***

Model STS-V6
-25399.21 (570.89)
***
-16665.20 (825.74)
***
-16675.26 (826.17)
***
-16435.07 (926.75)
***

Model STS-V8
-19845.82 (571.67)
***
-13457.73 (713.22)
***
-13541.59 (713.45)
***
-13573.96 (799.72)
***

Model Sunfire
-2572.78 (595.68)
***
-3842.32 (709.12)
***
-3598.75 (706.93)
***
-3337.73 (792.67)
***

Trim Aero Sedan 4D
-6468.94 (404.21)
***


Trim Aero Wagon 4D
-4920.24 (571.83)
***


Trim Arc Conv 2D
3535.82 (404.06)
***


Trim Arc Sedan 4D
-3583.32 (407.73)
***


Trim Arc Wagon 4D
-3074.13 (573.22)
***


Trim AWD Sportwagon 4D
1411.07 (405.98)
***


Trim Conv 2D
5035.17 (594.25)
***


Trim Coupe 2D 71.16 (434.33)
Trim Custom Sedan 4D
-2863.05 (404.25)
***


Trim CX Sedan 4D
-2732.57 (404.40)
***


Trim CXL Sedan 4D
-1387.57 (404.72)
***


Trim DHS Sedan 4D
4598.27 (567.99)
***


Trim DTS Sedan 4D
5246.46 (568.11)
***


Curtis Miller MATH 3080 Final Project pg. 8
Model 1 Model 2 Model 3 Model 4
Trim GT Coupe 2D 373.47 (572.57)
Trim GT Sedan 4D 641.11 (493.68)
Trim GT Sportwagon
1065.74 (405.20)
**


Trim GTP Sedan 4D
3506.23 (553.55)
***


Trim GXP Sedan 4D
2346.55 (405.53)
***


Trim Linear Conv 2D
7117.24 (404.51)
***


Trim Linear Wagon 4D
-3821.23 (573.43)
***


Trim LS Coupe 2D 651.03 (434.50)
Trim LS Hatchback 4D
1289.81 (405.56)
**


Trim LS MAXX Hback 4D
1068.17 (487.55)
*


Trim LS Sedan 4D
1000.76 (368.95)
**


Trim LS Sport Coupe 2D 455.87 (496.72)
Trim LS Sport Sedan 4D
1082.19 (496.37)
*


Trim LT Coupe 2D
4013.17 (595.03)
***


Trim LT Hatchback 4D
1537.76 (412.91)
***


Trim LT MAXX Hback 4D
1479.81 (487.13)
**


Trim LT Sedan 4D
1127.20 (368.21)
**


Trim MAXX Hback 4D 727.98 (489.19)
Trim Quad Coupe 2D
1546.22 (477.68)
**


Trim SE Sedan 4D
-1389.63 (405.10)
***


Trim Sedan 4D -92.62 (400.79)
Trim Special Ed Ultra 4D
1653.00 (568.69)
**


Trim SS Coupe 2D
5412.80 (597.04)
***


Trim SS Sedan 4D
6183.01 (510.69)
***


Trim SVM Hatchback 4D -794.84 (407.22)
Cruise 69.40 (101.52) 24.74 (156.78)
Sound
211.26 (79.76)
**

215.67 (121.17)
Leather
295.36 (92.87)
**
333.38 (140.46)
*


Type Coupe
-6186.96 (355.42)
***
-6210.08 (356.04)
***
-6158.61 (399.07)
***

Type Hatchback
-6292.90 (414.19)
***
-6220.53 (414.57)
***
-5997.48 (464.43)
***

Type Sedan
-6476.88 (321.90)
***
-6478.99 (322.82)
***
-6365.97 (361.74)
***

Type Wagon
-5743.29 (525.64)
***
-5814.46 (526.84)
***
-5595.90 (590.57)
***

Liter
2348.71 (429.13)
***
2401.27 (429.69)
***
2300.32 (481.58)
***

log(Mileage)
-1982.02 (88.98)
***

R
2

0.99 0.98 0.98 0.98
Adj. R
2

0.99 0.98 0.98 0.97
Num. obs. 804 804 804 804
F statistic 1307.22 957.44 1026.87 813.05
***
p < 0.001,
**
p < 0.01,
*
p < 0.05
Models predicting vehicle price
(note that standard deviations of the coefficients are listed to the side in parentheses)


Curtis Miller MATH 3080 Final Project pg. 9



Figure 1: Scatterplots (above diagonal) and correlations (below diagonal) of car data


Curtis Miller MATH 3080 Final Project pg. 10
Figure 2: Diagnostic plots of model 1 of the car data





Curtis Miller MATH 3080 Final Project pg. 11
Figure 3: Diagnostic plots of model 2 of the car data


Curtis Miller MATH 3080 Final Project pg. 12
Figure 4: Diagnostic plots of model 3 of the car data


Curtis Miller MATH 3080 Final Project pg. 13
Figure 5: Diagnostic plots of model 4 of the car data


Curtis Miller MATH 3080 Final Project pg. 14



Table 2: Regression table for sound pressure versus range

Model 1 Model 2 Model 3
(Intercept)
195.9923 (0.1820)
***
192.2367 (0.2191)
***
192.3104 (0.3009)
***

Range
1.2419 (0.0276)
***


2.6703 (0.0995)
***

log(Range)
7.0133 (0.1315)
***


Range
2

-0.1004 (0.0068)
***

R
2

0.5542 0.6355 0.6074
Adj. R
2

0.5540 0.6352 0.6069
Num. obs. 1634 1634 1634
***
p < 0.001,
**
p < 0.01,
*
p < 0.05
Statistical models predicting SoundPressure from Range
(note that standard deviations of the coefficients are listed to the side in parentheses)


Curtis Miller MATH 3080 Final Project pg. 15
Figure 6: Diagnostic plots of model 1 of the dolphin data


Curtis Miller MATH 3080 Final Project pg. 16
Figure 7: Diagnostic plots of model 2 of the dolphin data

Curtis Miller MATH 3080 Final Project pg. 17
Figure 8: Diagnostic plots of model 3 of the dolphin data