To study the factors that affect monthly premium paid for car insurance, a random sample of 1 ...
To study the factors that affect monthly premium paid for car insurance, a random sample of 138 customers who recently bought car insurance is taken. Researchers ran a regression of the premium paid by customers (in dollars) on the ages of their cars (in years), number of years since they obtained their driver's licenses (in years) and how long they usually use their cars each day (in hours).
How do you interpret the intercept β0 ? Keeping all other variables constant, a one unit increase in intercept is expected to increase the monthly premium by 219.54 dollars. Intercept will increase monthly premium by 219.54 if the age of car is 26.6 years, the driver has received their licence for 29.7 years and the car is used 3.6 hours every day. Under the assumption that the monthly premium is normally distributed, intercept equals the mean of this normal distribution. If age of car, years after licence and hours of daily use are all equal to zero, the monthly premium is expected to be 219.54 dollars.