OLS · Diagnostics
Linearity of the Conditional Mean
OLS assumes the specified predictors describe the mean outcome with the chosen functional form.
Page 1 of 7 · Big Picture
The big picture: Linearity of the Conditional Mean
Is a straight-line mean relationship plausible?
Why a policy analyst should care
A straight-line specification can give a misleading average when the conditional mean bends, so functional shape must be checked on the scale being modeled.
Follow the idea from the opening question to a practical decision. These are the conceptual moves this module will develop:
1 Question Is a straight-line mean relationship plausible?
2 Explore Curvature can remain in residuals
3 Formalize Linearity concerns the conditional mean
4 Transfer Investigate functional form
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