Key Concepts

• To identify an influential point, remove it from the data set and see if the slope of the regression line is changed significantly.
• Outliers typically are more than two standard deviations above or below the least-squares regression line.
• The standard deviation of the residuals is the typical prediction error. It tells us approximately how far off the prediction could be if we use the least-squares regression line.

Glossary

Influential Point: data points that are far from the other observed data points in the horizontal direction.

Outlier: an observation that does not fit the rest of the data.