HomeTechniques and TipsStatToolsForcing Regression through the Origin

17.5. Forcing Regression through the Origin

Applies to: StatTools 1.x, 5.x–7.x

What is the meaning of the box "Set constant to zero (origin)" in the StatTools regression dialog? How should I decide whether to use it?

A regression with m independent variables actually computes m+1 values: a coefficient for each variable and a constant term. The coefficients would correspond to variable cost and the constant term to fixed cost. StatTools finds the combination of those m+1 values that best fit the data.

If you check the box "set constant to zero", you are forcing the regression to include the origin. In other words, you are saying that you want the fixed cost to be zero no matter what, and the coefficients for the independent variables should be fitted within that constraint. This is a controversial procedure. By definition, the residuals will be higher than they would be if you let StatTools fit the constant term in addition to the coefficients. And when the regression is forced through the origin, R² is computed differently and can even be negative.

If you have sound theoretical reasons for rejecting the constant term, you might want to run the regression both ways and compare results, not just R² but the plots. If you don't have a strong reason to reject the constant term, you probably want to leave "set constant to zero" unchecked.

For more on this topic, try a Web search for regression force origin (without quotes).

Last edited: 2015-09-04

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