From the course: Economic Tips for Everyone

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Variables and forecast models

Variables and forecast models

From the course: Economic Tips for Everyone

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Variables and forecast models

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- When you eat a cookie, you can't taste all the ingredients like milk, flour, sugar, and salt. But when you eat a sugar cube, all you taste is sugar because that's the only ingredient. These differences between a cookie and a sugar cube are very similar to the differences between the two main kinds of forecast models that people use to make forecasts, predictions and inform business strategy. The sugar cube with one input, sugar, is like a univariate forecast model where there's one input and one output. When you show a graph of data in a univariate model, the data relationship should be pretty clear, after all, there's only one input and only one output. So they should be highly correlated and have a strong relationship. But the cookie with all the ingredients, flour, salt, sugar and milk, is like a multivariate forecast model where there are several different inputs but just one output. In the world of data, it's…

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