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Adjusted R2

 

Adjusted R2 is used to compensate for the addition of variables to the model.  As more independent variables are added to the regression model, unadjusted R2 will generally increase but there will never be a decrease.  This will occur even when the additional variables do little to help explain the dependent variable.  To compensate for this, adjusted R2 is corrected for the number of independent variables in the model.  The result is an adjusted R2 than can go up or down depending on whether the addition of another variable adds or does not add to the explanatory power of the model.  Adjusted R2 will always be lower than unadjusted.

 

It has become standard practice to report the adjusted R2, especially when there are multiple models presented with varying numbers of independent variables.

 

 

 

 

                            

 


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