Analysing a residual plot
A residual plot uses the transformed explanatory coordinate horizontally and the signed difference between observed and predicted transformed responses vertically. Residuals scattered around zero without a clear structure support the linearity assumption
- Use the fitted explanatory coordinate Place the transformed explanatory coordinate on the horizontal axis of the residual plot \(\displaystyle \text{horizontal coordinate}=x'\)
- Subtract predicted from observed At the same transformed explanatory value, subtract the fitted response from the observed transformed response \(\displaystyle e_i=y'_i-\widehat{y'}_i\)
- Keep the residual sign A point above the fitted line has a positive residual and a point below it has a negative residual \(\displaystyle e_i>0\Rightarrow\text{above},\quad e_i<0\Rightarrow\text{below}\)
- Inspect the pattern around zero A usable linear model has residuals scattered around zero without a clear curve, trend or changing spread \(\displaystyle \text{no clear structure around }e=0\Rightarrow\text{linear fit is supported}\)
Worked example
A transformed least-squares line is ŷ' = 5 + 2x'. One transformed observation has x' = 6 and y' = 16. Calculate its residual and state its position relative to the fitted line
- \(\displaystyle \widehat{y'}=5+2\times6=17\)Substitute the transformed explanatory value into the fitted line
- \(\displaystyle e=y'-\widehat{y'}=16-17=-1\)Subtract the predicted transformed response from the observed transformed response
- \(\displaystyle e<0\Rightarrow\text{the point is below the fitted line}\)A negative residual means the observed response is below the fitted response at the same explanatory coordinate
Common mistakes
Difficulty levels
Questions about this topic
Why is the residual plotted vertically?+
It measures the difference between observed and predicted response values at the same explanatory value, which is a vertical difference
What residual pattern supports a linear model?+
Residuals should lie on both sides of zero without a clear curve, directional trend or changing spread as the explanatory coordinate changes
Why must residuals keep their signs?+
The sign records whether the observed response is above or below the fitted response. Taking absolute values removes that information
Can I use a calculator?+
A calculator is allowed unless a question is marked no calculator
Which year level and chapter is this?+
Year 12, VCE Units 3 & 4, General Mathematics, chapter 4: Data transformation