Predicted annual credit card charge for a three-
person household with an annual income of
AMOUNT = 1305 + 33.1 ($40) + 356 (3)
AMOUNT = 1305 + 1324 + 1068
AMOUNT = 3697
Independent variables that could be added to the
Perhaps we could add some qualitative independent variables that could describe some
characteristics of the consumers regarding their credit card charges.
Now, bear in mind that the standard error of the estimate is somewhat large for this
model, and that might be corrected by the introduction of some other variables that
complete this model and that correct the problem of multicollinearity.
Here are some of those possible variables:
Average age of household. Independent variable that can give us additional
refining to the model.
Purchase preference: cash or credit (qualitative variable). Dummy variable that
can add some more precision into the model if done properly, and it is not
correlated with the other proposed since it is the only one to involve cultural
habits; therefore, it has to do with the introduction of a qualitative variable.
Male or Female and its subsequent percentage (qualitative variable). Data easy to
collect, and one that can help us big time in refininf the model.
Fundamentals of Business Statistics, Fifth Edition.
Deniss J. Sweeney, Thomas A. Williams, David R.