Prices and floor areas of houses in Palmerston North

price   ≈   ea  ×  areab

log (price)   ≈  a +  b × log (area)


This diagram gives two methods of predicting the response. The first method is:

  1. Transform x
  2. Put this transformed x-value into the least squares equation to obtain a prediction of the transformed Y.
  3. Apply the inverse transformation to the one that was used on Y to obtain the prediction of Y itself

Click on the scatterplot at any area (or log-area) to apply this method.

Select Using original scale from the pop-up menu to directly find the prediction from the nonlinear equation. (However the first method is easier to extend to find prediction intervals.)

The data set contains the sale prices ($thousand) and floor areas (square metres) from a sample of 143 houses that were sold in two suburbs of Palmerston North, New Zealand in 1999. All houses had been built in the previous 30 years.