CHAPTER 9 The Art of Regression Analysis Chapter Outline 9.1 Regression Pitfalls 260 260 Significant Is Not Necessarily Substantial Correlation Is Not Causation 261 Detrending Time Series Data 265 Incautious Extrapolation 268 Regression Toward the Mean 270 The Real Dogs of the Dow 273 9.2 Regression Diagnostics (Optional) Looking for Outliers 274 Checking the Standard Deviation Independent Error Terms 278 275 274 Exercises 280 There are few statistical facts more interesting than regression to the mean for two reasons. First, people encounter it almost every day of their lives. Second, almost nobody understands it. --Anonymous journal referee