Application to the Test Score Data

Equation (4.11) reports the regression line, estimated using the California test
score data, relating the standardized test score (TestScore) to the student–teacher
ratio (STR). The R2 of this regression is 0.051, or 5.1%, and the SER is 18.6.
The R2 of 0.051 means that the regressor STR explains 5.1% of the variance
of the dependent variable TestScore. Figure 4.3 superimposes this regression line
on the scatterplot of the TestScore and STR data. As the scatterplot shows, the
student–teacher ratio explains some of the variation in test scores, but much variation
remains unaccounted for.
The SER of 18.6 means that standard deviation of the regression residuals is
18.6, where the units are points on the standardized test. Because the standard
deviation is a measure of spread, the SER of 18.6 means that there is a large spread
of the scatterplot in Figure 4.3 around the regression line as measured in points on
the test. This large spread means that predictions of test scores made using only
the student–teacher ratio for that district will often be wrong by a large amount.