Dealing with Heterogeneity

This chapter, and the following three chapters, discuss solutions to the problems introduced in Chapters 2 and 3: heterogeneity, nested data, temporal correlation, and spatial correlation. We use both the linear regression model and the additive model as starting points. Figure 4.1 shows an overview of the methods we discuss in Chapters 4, 5, 6, and 7. In all these chapters, the model consists of a fixed term and a random term. The fixed term describes the response variable Y as a function of the explanatory variables via α + β 1 × X 1 + … + β q × X q in linear regression or α + f 1(X 1)+…+ f q (X q ) in additive modelling.