Connection between junk food and happiness in the world.

1. Michael Abramson – Raphaël Bils – Lucie Wullschleger Business Forecasting
Does Junk Food make you feel better?
People tend to eat more and more Junk Food. Does the level of happiness is related with the junk food
sales worldwide? Is Junk Food related to well-being?
Countries Level of happiness (X) Junk Food Sales (Y)
$
Russia 32 180,000.00
$
Spain 36 220,000.00
$
Brazil 71 390,000.00
$
Canada 65 510,000.00
$
China 78 890,000.00
$
United Kingdom 85 1,300,000.00
$
United States 88 1,450,000.00
$
Japan 92 1,340,000.00
$
South Korea 82 830,000.00
$
Germany 73 610,000.00
$
France 46 290,000.00
$
Taïwan 37 490,000.00
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.858003
R Square 0.736169
Adjusted R
Square 0.709786
Standard
Error 242969.1

2. Michael Abramson – Raphaël Bils – Lucie Wullschleger Business Forecasting
Observations 12
ANOVA
Significan
Df SS MS F ce F
1.65E+1
Regression 1 1.65E+12 2 27.90302 0.000356
Residual 10 5.9E+11 5.9E+10
Total 11 2.24E+12
Coefficien Standard Lower Upper Lower Upper
ts Error t Stat P-value 95% 95% 95.0% 95.0%
-
Intercept -446134 229531.7 1.94367 0.080589 -957563 65294.18 -957563 65294.18
X Variable 1 17647.91 3340.933 5.28233 0.000356 10203.85 25091.97 10203.85 25091.97
Null Hypothesis H0: The amount of the junk food sales will not be statistically significant and dependent
on the change in level of happiness.
Alternative Hypothesis: H1: The amount of our sales will be affected in a statistically significant manner
by the level of happiness.
Sales vs. Happiness Level Example for Regression and Interpreting the Statistics:
The goal of regression is to produce an equation that "best" depicts the relationship and minimizes the
deviations between the plotted points.
A "tighter" the regression line, the better
Level of Happiness (X) Junk Food Sales (Y)
100 1,600,000.00
1,400,000.00
80 1,200,000.00
1,000,000.00
60 800,000.00
40 600,000.00
400,000.00
20 200,000.00
-
0
United Kingdom
Canada
France
Russia
Brazil
China
United States
Japan
Taïwan
Spain
Germany
South Korea
Brazil
China
France
Spain
Canada
South Korea
Russia
United States
Japan
Taïwan
United Kingdom
Germany
What is the Data Telling You?

3. Michael Abramson – Raphaël Bils – Lucie Wullschleger Business Forecasting
The collection of data for tracking is best when it's been tracked over a longer period of time or a survey
has been done with a fairly high sample size and limited questioning bias.
The R squared value tells us what percent of the variation in the data is explained by the regression
equation given.
The Regression equation for a line is: Y = mX + b
The Least Square line equation is: Y = b0 + b1X
The R squared value of 73.6% tells us what percent of the variation in the data is explained by the
regression equation given.
This is high and seems to show a positive linear correlation between happiness level and sales.
In a boarder sense, an R squared of .30 could be considered high when forecasting the economy
because of multiple input variables. Example, the weather make you more or less happy, the stress you
have in your city, the revenue per capita in your country…
The T statistic will help us determine if the regression equation is a good one to use for forecasting.
The T statistic is an independent test that reveals if an X variable has a statistically significant effect on
the Y (stress levelvs sales).
It is calculated by dividing the X coefficient by the standard error.
The T statistic is used because it's possible to create a model with more than 1 variable (multiple
regression) and as the number of variables is added, the R squared will rise.
The general rule for significance of our T statistic is > 2 for a positivecorrelation or < -2 for a negative
correlation.
When considering if a model is a good forecaster, it's best to have both a high R squared and T statistic
(>2 or < -2)
The Standard Error is synonymous with the standard deviation, which means how far something will
move from the mean or center of the curve.
The standard error is an estimate of the amount of variability inherent in the regression and can be
measured with the MSE or Mean Square Error
The best forecast would have a lower standard deviation, which is associated with less risk.
The P Value is the probability of accepting the null hypothesis (our general assumption that stress level
has no affect on sales of ice cream) when testing at certain confidence levels: 90%, 95%, 99%.
In this case, it's associated with the independent variable and is usually good if it's < .05 or <.01
depending on the significant level we are testing at.

4. Michael Abramson – Raphaël Bils – Lucie Wullschleger Business Forecasting
The F test plays an important role in the analysis of variance, ANOVA. These sums of squares are
constructed so that the statistic tends to be greater when the null hypothesis is not true.
Forecasting is the process of making statements about events whose actual outcomes have not occurred
yet. Forecasting is "trying" to predict the future based on past events.
Forecasting is both an "art" and a "science." The most accurate forecasts are ones in which managers
have clearly tracked past data, have standard probabilities assigned, or have done an extensive survey
sample with high number of participants. i.e. at least 100 but usually a couple of thousand.
The forecast variables in the above examples are:
Y intercept = b = -446,134
X variable = m = 17,647.91
Residual Plot analysis: If the points in a residual plot are randomly dispersed around the horizontal
axis, a linear regression model is appropriate for the data; otherwise, a non-linear model is more
appropriate.
Junk Food Sales vs Happiness
1600000
1400000
Junk Food Sales ($)
1200000
1000000
800000
600000
400000
200000
0
0 20 40 60 80 100
Level of Happiness (%)
Using a forecast
What is the predicted amount of sales with happiness level forecast of 61, 100, 44%s ?
Solution
61: 17,647.91x61-446134= $630,388.51
100: $1,318,657
44: $330,374.04
Conclusion: If you want to open a Junk Food restaurant, you would have better result opening it in a
stressful city where people need to feel happier, faster…