OLS · Model refinement
Functional Form
How a predictor enters a model determines the comparison the coefficient represents.
Page 1 of 7 · Big Picture
The big picture: Functional Form
How should a predictor enter the model?
Why a policy analyst should care
How a predictor enters the equation determines the relationship the model is allowed to estimate, so transformations and nonlinear terms are substantive specifications.
Follow the idea from the opening question to a practical decision. These are the conceptual moves this module will develop:
1 Question How should a predictor enter the model?
2 Explore Compare a linear and curved association
3 Formalize Terms change the mean function
4 Transfer Defend a functional-form choice
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