Economics and Quantitative Analysis: Linear Regression Report


The recent growth in number of online universities has been one of the biggest challenges to the sector of higher education. Purpose of this limited report is to conduct a simple linear regression analysis to assess the relationship between the Graduation Rate as dependent variable and the Retention Rate as independent variable by using the data gathered from the Online Education Database.  


Today in higher education there are a number of change drivers. The main drivers include globalization, technology, economy, changing demographics, changing student expectations, increased demand for accountability, and changing employer needs (Kemelgor, 2000). The influence of these drivers is significant and transformative as a whole. Therefore, a number of researchers are in-line that higher education has faced disruption due to the online learning innovation (Christensen, 2011). Online or distance learning is a disruptive innovation in a sense it allows an affordable, simple, and accessible product to replace the conventional learning system that is expensive, complex, and inaccessible. Even the relatively new product’s quality is inferior. Nevertheless, distance learning has witnessed significant transformation since its origin. The transformation has resulted in positive implications for its growth and establishment as about 50 online open universities have opened since 1970 (Altbach, 2007). From many aspects the open online universities can be considered as forerunners regarding the tackling of challenges that are confronted by the higher education system around the world (Anderson, 2005).

There are about sixty percent education institutions which have agreed that online learning is an integral and important part of their overall learning system. Moreover, there is huge difference between the success and growth of online institutions. The enrolment in online course grew about twenty percent in comparison to only two percent growth in enrolments in overall education system. Furthermore, about thirty percent of all students take minimum one online course (Allen, 2010). 

The effective combination of factors like curriculum, pedagogy, and time spent on courses have contributed substantially towards the success of online education. Overall, the studies have agreed that online teaching is very helpful regarding promotion of learning in comparison to conventional mode of learning. In this way, it can be implied that the relationship between graduation and retention varies between the conventional courses and the online courses. However, the strong relationship between graduation rate and the retention rate is critical to the success of online universities as well as the conventional higher education institutions. The economists would be interested in this particular issues because retention rate and the graduation rate reflect upon the stream of workforce the state or the institutions will be receiving. In the light of the analysis, the economists can guide the governments to improve the existing labour force and education related policies (Dutton & Dutton, 2017). 


The first step in the analysis of the data is to identify the nature of the variables. It is already given, the retention rate is the independent variable while the graduation rate is the dependent variable. The independent variable is the one that is subject to manipulation as it is used to experiment and analyse its effect on the dependent variable. This study manipulates the retention rate to explore its effect on the dependent variable the graduation rate. Both variables in this case are continuous as they can take value between its maximum value and the minimum value. Mainly, simple linear regression analyses will be used to answer and address the purpose of this study. Following formula have been used to perform the simple regression analysis: 


Where predicted score is reflected by ‘Y’. The slope of the line is reflected by the ‘b’, and A is the intercept of Y. Overall, the line reflects how much change is reflected in the dependent variable by the unit change in the independent variable (DeGroot, 2012). After that a scatter diagram will be used to analyse the relationship between the two variables. It is followed by analysis of whether the regression equation provide a good fit. Then there is analysis of the situation from the point of view of the president of South University and from the president of University of Phoenix regarding the performance of the university in comparison to the overall performance of the online universities. 

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