Ceteris LabInteractive Econometrics

Lesson 3

Dependent and independent variables

Big question

Which variable are we trying to explain?

Lesson progress

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Big question
Concept
Activity
Quiz

Learning objectives

  • Explain dependent and independent variables in plain language.
  • Use dependent variable correctly in an interpretation.
  • Connect the lesson idea to a formula, graph, Python result, or real example.

Simple explanation

The dependent variable is the outcome we want to explain. Independent variables are used to explain or predict that outcome. Naming these roles clearly is the first step in building a model.

Key terms

Dependent variable
The outcome variable we want to explain.
Independent variable
A variable used to explain variation in the dependent variable.
Outcome
Another name for the dependent variable.
Predictor
Another name for an independent variable.

Outcome and predictor

yi=β0+β1xi+uiy_i = \beta_0 + \beta_1 x_i + u_i

Example

If the question is whether education is related to wages, wage is the dependent variable and education is an independent variable.

Checkpoint activity

Pause and explain this lesson's main idea in your own words before moving forward.

Try it yourself

Write one plain-English sentence explaining the main idea from this lesson.

Common mistakes

Check these before you move on.

A regression coefficient describes a pattern unless the assumptions or research design support a causal interpretation.

Quick quiz

In a wage equation, if wage is what we explain, wage is the:

Key takeaway

Clearly identifying y and x keeps the model organized.