Resolved: 6:06 - Why is a normal distribution required?
6:06 Why would a Normal Distribution of the data be required for a regression analysis? I only recall Normality of the Error terms being one of the 5 assumptions/requirements
1 answers ( 1 marked as helpful)
Hi Ryan,
This is one of the assumptions of OLS regression. The reason for this assumption is mainly for hypothesis testing. When the residuals are normally distributed, it allows us to make valid statistical inferences about the coefficients. It ensures that the t-tests and F-tests for significance are valid.
While normality of residuals is a key assumption for making valid statistical inferences in OLS regression, the data (independent or dependent variables) themselves don't need to be normally distributed.
Best,
Ned