Dataset importing

dataset = read.csv('who.csv', header = TRUE)
head(dataset)

The dataset is 190 instances(observations) and 10 attributes(features) as the following:

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.

str(dataset)
## '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 ...
summary(dataset)
##                 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  
## 

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(dataset, aes(x = TotExp, y  = LifeExp)) + 
  geom_point()

Simple linear regression

regressor = lm(LifeExp ~ TotExp, data = dataset)
summary(regressor)
## 
## Call:
## lm(formula = LifeExp ~ TotExp, data = dataset)
## 
## 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

P-value: is less than 0.05 significance level (2e-16) and F-Statistic is 65.26, so we can be sure that TotExp independent variable affecting the LifeExp. We can reject the null hypothesis. However, the R-squared is low (25.3%), which means that the model would explain only 25% of the model variability.

Std. Error is an estimate of the standard deviation of the coefficient, the amount it varies across cases.

This model can not be presented by a simple linear regression. The Adjusted R-squared percent is too low, may be if we included more independent variables we can get a higher value.

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?”

# raise LifeExp to 4.6 power
dataset$LifeExp_4.6 <- (dataset$LifeExp)^4.6
# raise TotExp to 0.06 power 
dataset$TotExp_0.06 <- (dataset$TotExp)^0.06
head(dataset)
ggplot(dataset, aes(x = TotExp_0.06, y  = LifeExp_4.6)) + 
  geom_point() 

regressor_2 = lm(LifeExp_4.6 ~ TotExp_0.06, data = dataset)
summary(regressor_2)
## 
## Call:
## lm(formula = LifeExp_4.6 ~ TotExp_0.06, data = dataset)
## 
## 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 ***
## 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(data = dataset, aes(x = TotExp_0.06, y = LifeExp_4.6)) +
geom_point() +
stat_smooth(method = "lm", col = "dodgerblue3") +
theme(panel.background = element_rect(fill = "white"),
axis.line.x=element_line(),
axis.line.y=element_line()) +
ggtitle("Linear Model Fitted to Data")

plot(regressor_2$fitted.values, regressor_2$residuals,
     xlab = 'fitted values',
     ylab = 'residuals',
     main = 'Residual plot')
abline(h=0)

# Residuals Q-Q plot
qqnorm(regressor_2$residuals)
qqline(regressor_2$residuals)

P-value: is still less than 0.05 significance level (2e-16) ,but F-Statistic got higher 507.7, so we can be sure that TotExp independent variable affecting the LifeExp. We can reject the null hypothesis. Moreover, the R-squared got better as well (72.8%), which means that the model would explain about 72.8% of the model variability.

Std. Error is an estimate of the standard deviation of the coefficient, the amount it varies across cases.

This model Definitly is better than the previous one.

3.

Using the results from 2, forecast life expectancy when TotExp^.06 =1.5. Then forecast life expectancy when TotExp^.06=2.5.

predict(regressor_2, data.frame(TotExp_0.06=c(1.5, 2.5)), interval = 'predict')^(1/4.6)
##        fit      lwr      upr
## 1 63.31153 35.93545 73.00793
## 2 86.50645 81.80643 90.43414

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

regressor_3 <- lm(LifeExp ~ PropMD + TotExp + TotExp:PropMD, data = dataset)
summary(regressor_3)
## 
## Call:
## lm(formula = LifeExp ~ PropMD + TotExp + TotExp:PropMD, data = dataset)
## 
## 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
plot(regressor_3$fitted.values, regressor_3$residuals,
     xlab = 'fitted values',
     ylab = 'residuals',
     main = 'Residual plot')
abline(h=0)

# Residuals Q-Q plot
qqnorm(regressor_2$residuals)
qqline(regressor_2$residuals)

Residual standard error is 8.765 and F-statistic is 34.49. Considering that average life expectancy is 67.38, the SE is not terrible and F-statistics is fairly high (but lower than in the first model). R2 is only 0.3574, so the model explains only 35.74% of variability, which is not high. P-value is nearly 0, so the relationship is not due to random variation.

Looking at residuals plots it is clear that there is no constant variability and that residuals are not normally distributed. This is not a good model to describe the relationship. Kind of similar to the first model.

5.

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

predict(regressor_3, data.frame(PropMD = 0.03, TotExp = 14), interval = 'predict')
##       fit      lwr      upr
## 1 107.696 84.24791 131.1441

The prediction is 107.696 years with 95% confidence interval between 84.247 and 131.144. The prediction could be realistic but it is very rare. I don’t think that it is a good model, The Adjusted R-squared in way too low to explain the variability of the model.