How Do We Use Statistics In The Real Life
We learn a lot of interesting and useful concepts in school but sometimes it's not very clear how we can use them in real life.
One concept/tool that might be widely underestimated is Linear Regression.
EX 1
How much money should you allocate for gas?
When you are traveling to a specific spot, thinking that there must be a way to estimate the amount of money needed, based on the distance you're traveling.
First, you look at some data.
You've been laboriously tracking your car’s efficiency for the last year — because who doesn’t! — so somewhere in your computer there's this spreadsheet
At this point these are just numbers. It's not very easy to get any valuable information from this spreadsheet.
However, plotted like this it's clear that there is some "connection" between how far you can drive without filling the tank. Not that you didn't know that already but now — with data — it becomes clear.
What you really want to figure out is
"If I drive for 1200 miles, how much will I pay for gas?"
In order to know that, you need to use the data we just saw and predict how much you are going to spend.
Let's say, you want to have a road trip to Las Vegas, then this math model is suitable for you to predict the cost. And then you end up with a mathematical model that describes the relationship between miles driven and money spent to fill the tank.
Example of plot of your dataset (data from the past) and your predictions (data from the future)
If you want, you can fit a regression line on the plot to make it more clear.
Since we're only dealing with one independent variable, the model can be specified as:
