1. CHAPTER 1. ANALYSIS OF ECONOMICS DATA

1.1. 1.3 REGRESSION ANALYSIS

library(foreign)
df = read.dta(file = "Dataset/AED_HOUSE.DTA")

summary(df)

     price             size         bedrooms       bathrooms    
 Min.   :204000   Min.   :1400   Min.   :3.000   Min.   :2.000  
 1st Qu.:233000   1st Qu.:1600   1st Qu.:3.000   1st Qu.:2.000  
 Median :244000   Median :1800   Median :4.000   Median :2.000  
 Mean   :253910   Mean   :1883   Mean   :3.793   Mean   :2.207  
 3rd Qu.:270000   3rd Qu.:2000   3rd Qu.:4.000   3rd Qu.:2.500  
 Max.   :375000   Max.   :3300   Max.   :6.000   Max.   :3.000  
    lotsize           age          monthsold          list       
 Min.   :1.000   Min.   :23.00   Min.   :3.000   Min.   :199900  
 1st Qu.:2.000   1st Qu.:31.00   1st Qu.:5.000   1st Qu.:239000  
 Median :2.000   Median :35.00   Median :6.000   Median :245000  
 Mean   :2.138   Mean   :36.41   Mean   :5.966   Mean   :257824  
 3rd Qu.:3.000   3rd Qu.:39.00   3rd Qu.:7.000   3rd Qu.:269000  
 Max.   :3.000   Max.   :51.00   Max.   :8.000   Max.   :386000  

ols <- lm(price ~ size, data=df)
summary(ols)

Call:
lm(formula = price ~ size, data = df)

Residuals:
   Min     1Q Median     3Q    Max 
-45436 -16936   1949  17818  47932 

Coefficients:
             Estimate Std. Error t value Pr(>|t|)    
(Intercept) 115017.28   21489.36   5.352 1.18e-05 ***
size            73.77      11.17   6.601 4.41e-07 ***
---
Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1

Residual standard error: 23550 on 27 degrees of freedom
Multiple R-squared:  0.6175,	Adjusted R-squared:  0.6033 
F-statistic: 43.58 on 1 and 27 DF,  p-value: 4.409e-07

Figure 1.1

plot(df$size, df$price, xlim=c(0,4000), ylim=c(0,500000), xlab="House size in square feet", ylab="House sale price in dollars",pch=19)
abline(ols)
legend(3000, 170000, c("Actual",  "Fitted"), lty=c(-1,1), pch=c(19,-1), bty="o")