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Old Thu, Apr-10-2014, 03:57:34 AM   #36
ramnazeri
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Default Re: E36M3 Regression Analysis - Purchase Price Findings

Quote:
Originally Posted by Mjoyabl3 View Post
- A sample consisting of many cars of various years, body styles, clean and branded titles, colors, transmissions, options, body damage, mods, etc. would need an EXTENSIVE amount of data to cover ALL of the variations in the cars and making it all average out. Meaning, the more variation that can exist in a data set, the more data points, "n" you need to make it approach a normal distribution, look up "central limit theorem" for more explanation. In this example, the number of samples must be MUCH larger than n=67 for it to have statistical significance because of the amount of variation in the data.
I understand that the variation does require extensive examples, but the CLT states that as long as there are over 30 samples, the distribution is approx normal. "approx" is the key term there, as there is room for it to be more normal with a more thorough database. However, because there really are only the 3 different styles, 67 as a sample size is fine.

What truly matters when it comes to all of the variations is if the data was taken from an SRS or any other randomization. A random sample will factor in any variation in the models (i.e. location, body, year, miles, etc)

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