3.9 Extensions

• Interaction / Synergy effects

  Include a product term to account for synergy where one changes in one variable changes the association of the Y with another:

$$Y = \beta_{0} + \beta_{1}X_1 + \beta_{2}X_2 + \beta_{3}X_1 X_2 + \epsilon_i$$

• Non-linear relationships (e.g. polynomial fits)

$$Y = \beta_{0} + \beta_{1}X + \beta_{2}X^2 + ... \beta_{n}X^n + \epsilon_i$$