Business Glossary

a statistical technique used to estimate mathematical models of economic and other processes. It is used to find a mathematical expression that best fits the relationship between a group of random variables as indicated by a sample of data.

Example: An appraiser wants to find the relationship between sales prices for homes and their physical characteristics. Data are collected on the prices of a group of homes and their size, number of rooms, location, and age. Linear regression is used to analyze the relationship expressed by the data. The regression model can then be used to estimate prices for other similar houses on the market.