Resolved: Linearity Quiz Qn: Linearity is easy to relax
Could someone elaborate on what it means to "relax" linearity?
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One of the key assumptions of OLS is linearity, which means that the change in the dependent variable is proportional to the change in the independent variables. However, in real-world data, this assumption is often too restrictive.
Relaxing the linearity assumption means allowing for more flexibility in the model to capture non-linear relationships between variables. One way to do this (demonstrated in Linear Regression Practical Example (Part 2)) is to apply a tranformation (for example, a log-transformation) to the dependent or independent variables to make their relationship more linear.
Hope this helps!