Which of the following is not a common pitfall of using regression to forecast?

Question

Which of the following is not a common pitfall of using regression to forecast?

Making predictions outside the range of data used to develop the model

Overly generalizing a regression model

Assuming a cause-and-effect relationship based on the model

Using a model with a negative slope coefficient

All of the above are common pitfalls

Making predictions outside the range of data used to develop the model

Overly generalizing a regression model

Assuming a cause-and-effect relationship based on the model

Using a model with a negative slope coefficient

All of the above are common pitfalls

Explanation / Answer

Making predictions outside the range is absolutely a basic pitfall that we at times ignore and should be taken care of. Also a negative slope indicates that one value decreases as the other increases and hence non linear relationships cannot be maintained. Over generalizing is again a drawback so the last statement left i.e. assuming a cause and effect relationship is not a pitfall.

Using out of range data would fetch us unpredictable results and is a pitfall, this should be made use that data used falls within the range, cause and effect is a part of the regression model in which one variable is studied against another variable to understand the relationships.  

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