What Are We Assuming?
The preceding discussion outlines the conditions under which we can generalize using regression analysis. First, we need a logical or theoretical reason to anticipate that Y and X have a linear relationship. Second, the default method[3] that we use to estimate the line of best fit works reliably. We know that the method works reliably when the random errors, εi, satisfy four conditions:
[3] Like all statistical software, JMP uses a default method to line-fitting that is known as ordinary least squares estimation, or OLS. A full discussion of OLS is well beyond the scope of this book, but it's worth noting that these assumptions refer to OLS in particular, not to regression in general.
They are normally distributed.
They ...
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