Ceteris LabInteractive Econometrics

Lesson 2

Dependent variable and explanatory variable

Big question

Which variable are we explaining, and which variable are we using to explain it?

Lesson progress

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Big question
Concept
Activity
Quiz

Learning objectives

  • Explain dependent variable and explanatory variable 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

Every simple regression starts with a clear role assignment. The dependent variable is the outcome. The explanatory variable is the measured factor used to describe or predict that outcome.

Key terms

Dependent variable
The outcome the model tries to explain or predict.
Explanatory variable
The variable used to describe changes in the dependent variable.
Outcome
The measured result or behavior being studied.
Predictor
Another name for an explanatory variable, especially when the goal is prediction.

Roles in the model

dependent variable=f(explanatory variable)\text{dependent variable} = f(\text{explanatory variable})

Example

If the question is 'Do workers with more education earn more?', wage is y and education is x. If the question changes, the variable roles may change too.

Interactive visual

Variable roles

The same data can answer different questions only after the y and x roles are chosen.

wage_sample.csv

y variable

wage

The dependent variable. It is the outcome students want to explain.

x variable

education

The explanatory variable. It is used to describe changes in wage.

Interactive activity

Variable classifier

Classify each part of a regression model.

0/4 correctly classified

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 wage = beta0 + beta1 education + u, what role does wage play?

Quick quiz

Why should students define y and x before estimating a regression?

Key takeaway

Regression interpretation begins with the variable roles: y is explained, and x does the explaining.