1. Reporting Results, and choosing a functional form. Hill et al chapter 6.

2. Explained and Unexplained Variation Total Explained Unexplained

3. Decomposing the variation link to proof

4. Coefficient of determination

5. Example

6. Reporting Results

7. Choosing a functional form Model has been assumed to be linear in the parameters. Linear in parameters: parameters are not multiplied together, raised to a power etc. variables, however, can be transformed in any convenient way, as long as the resulting model satisfies assumptions SR1- SR5 of the simple linear regression model.

8. A functional form for food expenditure It is expected that food expenditure will rise at a decreasing rate with income

9. Some common functional forms

10. Empirical issues

11. An alternative functional form

12. Are the residuals normal (Jarque- Bera)

13. Appendix: proof back