OLS · Diagnostics
Residuals
Residuals show what the model did not explain for each observation.
Page 1 of 7 · Big Picture
The big picture: Residuals
What does a residual reveal?
Why a policy analyst should care
Residuals show where the fitted conditional mean misses individual outcomes, making systematic patterns visible rather than hiding them in a single fit statistic.
Follow the idea from the opening question to a practical decision. These are the conceptual moves this module will develop:
1 Question What does a residual reveal?
2 Explore Read observed minus fitted
3 Formalize Residuals are deviations from fitted values
4 Transfer Audit an OLS residual plot
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