# Nonlinear relationship between two variables is drawn

### The relationship between variables - Draw the correct conclusions

A: Well, we use linear regression to know how two or more variables are related. for two variables to have zero linear relationship and a strong nonlinear A: The idea is as follows: when we draw a scatterplot, generally there will not be one. The common usage of the word correlation refers to a relationship between equation for predicting scores, and ultimately draw testable conclusion about the parent population. A positive correlation is where the two variables react in the same way, or exponential equation, etc., then they have a nonlinear correlation . A method in which the degree of relationship between at least two variables is assessed. or a curvilinear pattern the correlation will be close to no linear reaction. We will use the regression line on the scatter plot to draw prediction lines.

That is the subject of Hinkle chapter 17 and this lesson The Student t distribution with n-2 degrees of freedom is used. Remember, correlation does not imply causation. A value of zero for r does not mean that there is no correlation, there could be a nonlinear correlation.

### Statistics review 7: Correlation and regression

Confounding variables might also be involved. Suppose you discover that miners have a higher than average rate of lung cancer.

You might be tempted to immediate conclude that their occupation is the cause, whereas perhaps the region has an abundance of radioactive radon gas leaking from the subterranian regions and all people in that area are affected.

Or, perhaps, they are heavy smokers It is the fraction of the variation in the values of y that is explained by least-squares regression of y on x. This will be discussed further in lesson 6 after least squares is introduced. Correlation coefficients whose magnitude are between 0. Correlation coefficients whose magnitude are less than 0.

We can readily see that 0. The Spearman rho correlation coefficient was developed to handle this situation. This is an unfortunate exception to the general rule that Greek letters are population parameters!

The formula for calculating the Spearman rho correlation coefficient is as follows. If there are no tied scores, the Spearman rho correlation coefficient will be even closer to the Pearson product moment correlation coefficent.

- Correlation Coefficients
- Statistics review 7: Correlation and regression

The slopes of the curves describing the relationships we have been discussing were constant; the relationships were linear. Many relationships in economics are nonlinear. A nonlinear relationship Relationship between two variables in which the slope of the curve showing the relationship changes as the value of one of the variables changes.

A nonlinear curve A curve whose slope changes as the value of one of the variables changes.

The relationship she has recorded is given in the table in Panel a of Figure The corresponding points are plotted in Panel b. Clearly, we cannot draw a straight line through these points. Instead, we shall have to draw a nonlinear curve like the one shown in Panel c. This information is plotted in Panel b. This is a nonlinear relationship; the curve connecting these points in Panel c Loaves of bread produced has a changing slope.

Inspecting the curve for loaves of bread produced, we see that it is upward sloping, suggesting a positive relationship between the number of bakers and the output of bread. But we also see that the curve becomes flatter as we travel up and to the right along it; it is nonlinear and describes a nonlinear relationship. How can we estimate the slope of a nonlinear curve? After all, the slope of such a curve changes as we travel along it. We can deal with this problem in two ways.

One is to consider two points on the curve and to compute the slope between those two points. Another is to compute the slope of the curve at a single point. When we compute the slope of a curve between two points, we are really computing the slope of a straight line drawn between those two points.

They are the slopes of the dashed-line segments shown. These dashed segments lie close to the curve, but they clearly are not on the curve.

After all, the dashed segments are straight lines. When we compute the slope of a nonlinear curve between two points, we are computing the slope of a straight line between those two points. Here the lines whose slopes are computed are the dashed lines between the pairs of points. Every point on a nonlinear curve has a different slope. To get a precise measure of the slope of such a curve, we need to consider its slope at a single point.

To do that, we draw a line tangent to the curve at that point. A tangent line A straight line that touches, but does not intersect, a nonlinear curve at only one point. The slope of a tangent line equals the slope of the curve at the point at which the tangent line touches the curve. Consider point D in Panel a of Figure We have drawn a tangent line that just touches the curve showing bread production at this point.

It passes through points labeled M and N. The vertical change between these points equals loaves of bread; the horizontal change equals two bakers. The slope of our bread production curve at point D equals the slope of the line tangent to the curve at this point.

In Panel bwe have sketched lines tangent to the curve for loaves of bread produced at points B, D, and F. Notice that these tangent lines get successively flatter, suggesting again that the slope of the curve is falling as we travel up and to the right along it.

In Panel athe slope of the tangent line is computed for us: Generally, we will not have the information to compute slopes of tangent lines. We will use them as in Panel bto observe what happens to the slope of a nonlinear curve as we travel along it.

## Relationship Between Variables

We see here that the slope falls the tangent lines become flatter as the number of bakers rises. Notice that we have not been given the information we need to compute the slopes of the tangent lines that touch the curve for loaves of bread produced at points B and F. In this text, we will not have occasion to compute the slopes of tangent lines.

Either they will be given or we will use them as we did here—to see what is happening to the slopes of nonlinear curves. In the case of our curve for loaves of bread produced, the fact that the slope of the curve falls as we increase the number of bakers suggests a phenomenon that plays a central role in both microeconomic and macroeconomic analysis. As we add workers in this case bakersoutput in this case loaves of bread rises, but by smaller and smaller amounts.

Another way to describe the relationship between the number of workers and the quantity of bread produced is to say that as the number of workers increases, the output increases at a decreasing rate. In Panel b of Figure Indeed, much of our work with graphs will not require numbers at all.

We turn next to look at how we can use graphs to express ideas even when we do not have specific numbers.