The attached who.csv dataset contains real-world data from 2008. The variables included follow.

Country: name of the country

LifeExp: average life expectancy for the country in years

InfantSurvival: proportion of those surviving to one year or more

Under5Survival: proportion of those surviving to five years or more

TBFree: proportion of the population without TB.

PropMD: proportion of the population who are MDs

PropRN: proportion of the population who are RNs

PersExp: mean personal expenditures on healthcare in US dollars at average exchange rate

GovtExp: mean government expenditures per capita on healthcare, US dollars at average exchange rate

TotExp: sum of personal and government expenditures.

getURL <- "https://raw.githubusercontent.com/deepakmongia/Data605-Spring2019/master/who.csv"
who_data <- read.csv(getURL, header = TRUE, sep = ",")

##Getting the basic statistics of the data set
summary(who_data)
##                 Country       LifeExp      InfantSurvival  
##  Afghanistan        :  1   Min.   :40.00   Min.   :0.8350  
##  Albania            :  1   1st Qu.:61.25   1st Qu.:0.9433  
##  Algeria            :  1   Median :70.00   Median :0.9785  
##  Andorra            :  1   Mean   :67.38   Mean   :0.9624  
##  Angola             :  1   3rd Qu.:75.00   3rd Qu.:0.9910  
##  Antigua and Barbuda:  1   Max.   :83.00   Max.   :0.9980  
##  (Other)            :184                                   
##  Under5Survival       TBFree           PropMD              PropRN         
##  Min.   :0.7310   Min.   :0.9870   Min.   :0.0000196   Min.   :0.0000883  
##  1st Qu.:0.9253   1st Qu.:0.9969   1st Qu.:0.0002444   1st Qu.:0.0008455  
##  Median :0.9745   Median :0.9992   Median :0.0010474   Median :0.0027584  
##  Mean   :0.9459   Mean   :0.9980   Mean   :0.0017954   Mean   :0.0041336  
##  3rd Qu.:0.9900   3rd Qu.:0.9998   3rd Qu.:0.0024584   3rd Qu.:0.0057164  
##  Max.   :0.9970   Max.   :1.0000   Max.   :0.0351290   Max.   :0.0708387  
##                                                                           
##     PersExp           GovtExp             TotExp      
##  Min.   :   3.00   Min.   :    10.0   Min.   :    13  
##  1st Qu.:  36.25   1st Qu.:   559.5   1st Qu.:   584  
##  Median : 199.50   Median :  5385.0   Median :  5541  
##  Mean   : 742.00   Mean   : 40953.5   Mean   : 41696  
##  3rd Qu.: 515.25   3rd Qu.: 25680.2   3rd Qu.: 26331  
##  Max.   :6350.00   Max.   :476420.0   Max.   :482750  
## 
str(who_data)
## 'data.frame':    190 obs. of  10 variables:
##  $ Country       : Factor w/ 190 levels "Afghanistan",..: 1 2 3 4 5 6 7 8 9 10 ...
##  $ LifeExp       : int  42 71 71 82 41 73 75 69 82 80 ...
##  $ InfantSurvival: num  0.835 0.985 0.967 0.997 0.846 0.99 0.986 0.979 0.995 0.996 ...
##  $ Under5Survival: num  0.743 0.983 0.962 0.996 0.74 0.989 0.983 0.976 0.994 0.996 ...
##  $ TBFree        : num  0.998 1 0.999 1 0.997 ...
##  $ PropMD        : num  2.29e-04 1.14e-03 1.06e-03 3.30e-03 7.04e-05 ...
##  $ PropRN        : num  0.000572 0.004614 0.002091 0.0035 0.001146 ...
##  $ PersExp       : int  20 169 108 2589 36 503 484 88 3181 3788 ...
##  $ GovtExp       : int  92 3128 5184 169725 1620 12543 19170 1856 187616 189354 ...
##  $ TotExp        : int  112 3297 5292 172314 1656 13046 19654 1944 190797 193142 ...
head(who_data)
##               Country LifeExp InfantSurvival Under5Survival  TBFree
## 1         Afghanistan      42          0.835          0.743 0.99769
## 2             Albania      71          0.985          0.983 0.99974
## 3             Algeria      71          0.967          0.962 0.99944
## 4             Andorra      82          0.997          0.996 0.99983
## 5              Angola      41          0.846          0.740 0.99656
## 6 Antigua and Barbuda      73          0.990          0.989 0.99991
##        PropMD      PropRN PersExp GovtExp TotExp
## 1 0.000228841 0.000572294      20      92    112
## 2 0.001143127 0.004614439     169    3128   3297
## 3 0.001060478 0.002091362     108    5184   5292
## 4 0.003297297 0.003500000    2589  169725 172314
## 5 0.000070400 0.001146162      36    1620   1656
## 6 0.000142857 0.002773810     503   12543  13046

1. Provide a scatterplot of LifeExp~TotExp, and run simple linear regression. Do not transform the variables. Provide and interpret the F statistics, R^2, standard error,and p-values only. Discuss whether the assumptions of simple linear regression met.

library(ggplot2)
ggplot(who_data, aes(x=who_data$TotExp, y=who_data$LifeExp)) + geom_point()

lifeexp.totexp.lm <- lm(LifeExp ~ TotExp, who_data)
lifeexp.totexp.lm
## 
## Call:
## lm(formula = LifeExp ~ TotExp, data = who_data)
## 
## Coefficients:
## (Intercept)       TotExp  
##   6.475e+01    6.297e-05
summary(lifeexp.totexp.lm)
## 
## Call:
## lm(formula = LifeExp ~ TotExp, data = who_data)
## 
## Residuals:
##     Min      1Q  Median      3Q     Max 
## -24.764  -4.778   3.154   7.116  13.292 
## 
## Coefficients:
##              Estimate Std. Error t value Pr(>|t|)    
## (Intercept) 6.475e+01  7.535e-01  85.933  < 2e-16 ***
## TotExp      6.297e-05  7.795e-06   8.079 7.71e-14 ***
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## Residual standard error: 9.371 on 188 degrees of freedom
## Multiple R-squared:  0.2577, Adjusted R-squared:  0.2537 
## F-statistic: 65.26 on 1 and 188 DF,  p-value: 7.714e-14
ggplot(who_data, aes(x=who_data$TotExp, y=who_data$LifeExp)) + geom_point(color = 'red') + 
  geom_line(aes(x = who_data$TotExp, y=predict(lifeexp.totexp.lm, newdata = who_data)), color = 'blue')

As we see above in the summary of the model, even though the p-value is very leass, but R squared is also very less. Also from the plot, it is clear that this linear model is not a good fit.

2. Raise life expectancy to the 4.6 power (i.e., LifeExp^4.6). Raise total expenditures to the 0.06 power (nearly a log transform, TotExp^.06). Plot LifeExp^4.6 as a function of TotExp^.06, and r re-run the simple regression model using the transformed variables. Provide and interpret the F statistics, R^2, standard error, and p-values. Which model is “better?”

ggplot(who_data, aes(x=(who_data$TotExp ^ 0.06), y=(who_data$LifeExp ^ 4.6))) + geom_point()

lifeexp.totexp.trf.lm <- lm(I(LifeExp ^ 4.6) ~ I(TotExp ^ 0.06), who_data)
lifeexp.totexp.trf.lm
## 
## Call:
## lm(formula = I(LifeExp^4.6) ~ I(TotExp^0.06), data = who_data)
## 
## Coefficients:
##    (Intercept)  I(TotExp^0.06)  
##     -736527909       620060216
summary(lifeexp.totexp.trf.lm)
## 
## Call:
## lm(formula = I(LifeExp^4.6) ~ I(TotExp^0.06), data = who_data)
## 
## Residuals:
##        Min         1Q     Median         3Q        Max 
## -308616089  -53978977   13697187   59139231  211951764 
## 
## Coefficients:
##                  Estimate Std. Error t value Pr(>|t|)    
## (Intercept)    -736527910   46817945  -15.73   <2e-16 ***
## I(TotExp^0.06)  620060216   27518940   22.53   <2e-16 ***
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## Residual standard error: 90490000 on 188 degrees of freedom
## Multiple R-squared:  0.7298, Adjusted R-squared:  0.7283 
## F-statistic: 507.7 on 1 and 188 DF,  p-value: < 2.2e-16
ggplot(who_data, aes(x=(who_data$TotExp ^ 0.06), y=(who_data$LifeExp ^ 4.6))) + geom_point(color = 'red') + 
  geom_line(aes(x = (who_data$TotExp ^ 0.06), y=predict(lifeexp.totexp.trf.lm, newdata = who_data)), color = 'blue')

From this above plot, the linear relationship looks very clear between these 2 transformed variables.

Also as we see from the model, the R squared values are high enough to assume that this is a good fit for the data.

Hence we see that the new model fits good as compared to the model we built earlier.

3. Using the results from 3, forecast life expectancy when TotExp^.06 =1.5. Then forecast life expectancy when TotExp^.06=2.5.

LifeExp.trf.3a <- predict(lifeexp.totexp.trf.lm, newdata = data.frame(TotExp = 1.5 ^ (1/0.06)))
LifeExp.3a <- LifeExp.trf.3a ^ (1/4.6)
print(LifeExp.3a)
##        1 
## 63.31153
LifeExp.trf.3b <- predict(lifeexp.totexp.trf.lm, newdata = data.frame(TotExp = 2.5 ^ (1/0.06)))
LifeExp.3b <- LifeExp.trf.3b ^ (1/4.6)
print(LifeExp.3b)
##        1 
## 86.50645

4. Build the following multiple regression model and interpret the F Statistics, R^2, standard error, and p-values. How good is the model?

LifeExp = b0+b1 x PropMd + b2 x TotExp +b3 x PropMD x TotExp

LifeExp.prob4.lm <- lm(LifeExp ~ PropMD + TotExp + PropMD * TotExp, data = who_data)

summary(LifeExp.prob4.lm)
## 
## Call:
## lm(formula = LifeExp ~ PropMD + TotExp + PropMD * TotExp, data = who_data)
## 
## Residuals:
##     Min      1Q  Median      3Q     Max 
## -27.320  -4.132   2.098   6.540  13.074 
## 
## Coefficients:
##                 Estimate Std. Error t value Pr(>|t|)    
## (Intercept)    6.277e+01  7.956e-01  78.899  < 2e-16 ***
## PropMD         1.497e+03  2.788e+02   5.371 2.32e-07 ***
## TotExp         7.233e-05  8.982e-06   8.053 9.39e-14 ***
## PropMD:TotExp -6.026e-03  1.472e-03  -4.093 6.35e-05 ***
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## Residual standard error: 8.765 on 186 degrees of freedom
## Multiple R-squared:  0.3574, Adjusted R-squared:  0.3471 
## F-statistic: 34.49 on 3 and 186 DF,  p-value: < 2.2e-16

As we see from the above model, R-squared value is very less. Hence we see that this is not a very good fit.

5. Forecast LifeExp when PropMD=.03 and TotExp = 14. Does this forecast seem realistic? Why or why not?

LifeExp.trf.5 <- predict(LifeExp.prob4.lm, newdata = data.frame(TotExp = 14, PropMD = 0.03))
print(LifeExp.trf.5)
##       1 
## 107.696

The forecast does not seem to be realistic as it is a very high value which is not reasonable.