Understanding Multiple Regression from Scratch

Modern society is awash with data. 

Extracting meaningful information from this data is extremely important for businesses and researchers alike.

In particular, “multiple regression analysis” is gaining attention as a powerful tool for understanding phenomena involving multiple interacting factors and predicting the future.

This article provides a detailed explanation of the basic concepts of multiple regression analysis, the situations in which it is used, and the benefits of learning it.

1. What is Multiple Regression Analysis?

Multiple regression analysis is a statistical method that reveals the relationship between a single dependent variable (target variable) and multiple explanatory variables (independent variables).

This method allows you to quantitatively assess how each explanatory variable influences the dependent variable.

For example, when predicting the sales of a product, you can simultaneously consider multiple factors such as advertising expenditure, price, seasonality, and the number of competitor stores, and analyze their relative effects.

Furthermore, multiple regression analysis not only creates a predictive model but also excels at revealing the importance of each variable and any interactions that may exist.

This allows you to understand the complex causal relationships hidden behind the data and gain the basis for implementing effective measures.

2. In What Scenarios is it Used?

- Business and Marketing

Companies use multiple regression analysis to predict market trends and consumer behaviour. For example, they analyze how factors such as advertising spend, pricing strategies, and campaign timing affect sales, identifying the optimal marketing strategies.

- Economics and Finance

Multiple regression analysis is also greatly helpful in predicting GDP growth rates, stock market trends, and unemployment rates based on economic indicators and market data. This allows policymakers and investors to improve the accuracy of decision-making in risk control and asset management.

- Healthcare and Wellness

In the medical field, multiple regression analysis is used, combining factors such as patient age, lifestyle, and genetic information, to predict illness and treatment outcomes. This enables the early detection of disease and the realization of a data-driven approach to creating effective treatment plans.

- Social Sciences

Multiple regression analysis is indispensable in researching human behaviour and social phenomena. It is attracting attention as a method for clarifying how various social factors, such as education, crime, and living environment, affect individuals and regions, and for organizing data to support policy recommendations.

3. Benefits of Learning Multiple Regression Analysis

- Data-Driven Decision-Making

By learning multiple regression analysis, you can make rational decisions based on data. Even in business and daily life, the ability to identify the most influential factors in problems involving multiple factors is highly valuable.

- Unraveling Complex Problems

Real-world problems often have complex causal relationships that cannot be explained by a single factor. By understanding multiple regression analysis, you can unravel these complex relationships and gain deeper insights.

- Career Advancement and Increased Market Value

Data analysis skills are now a required skill in many industries. Knowledge of multiple regression analysis directly leads to career advancement in various fields such as data analysis, marketing, finance, and healthcare. In fact, in the fields of data science and business analytics, the ability to use multiple regression analysis is highly valued.

- Improved Logical Thinking and Problem-Solving Skills

Learning statistical methods means more than just learning how to handle numbers. The ability to interpret problems logically, clarify the relationship between cause and effect, and then construct practical solutions is a skill that will be invaluable in both daily life and business situations.

In Conclusion

Multiple regression analysis is an analytical method with value beyond mere formulas. Its ability to identify true causal relationships from diverse data and predict the future is utilized in a wide range of fields, including business, economics, healthcare, and social sciences. Acquiring this knowledge will enable data-based, confident decision-making and will directly contribute to personal career advancement.

We hope this blog post inspires you to take your first step into the world of multiple regression analysis and explore new possibilities. New discoveries and learning will surely lead your daily life and career in a better direction.

If you want to learn multiple regression analysis, we recommend this book (access here).