A Source of Constant Discussion Among Applied Econometricians Is the Degree

question 2

Essay

A source of constant discussion among applied econometricians is the degree to which measures of the overall fit of an estimated equation also measure the quality of that regression. To date, we have introduced something like four different measures of overall fit, but the two most used are $\mathrm { R } ^ { 2 }$ and $\overline { \mathrm { R } } ^ { 2 }$ .
(a) Carefully distinguish between $\mathrm { R } ^ { 2 }$ and $\overline { \mathrm { R } } ^ { 2 }$ .
(b) Of the two, which do you recommend typically using? Why?
(c) What drawbacks are there to the use of the measure you chose (as your answer to part (b) above) as the primary determinant of the overall quality of a regression?

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Definitions:

Monopolist

A single supplier in a market who has exclusive control over a product or service, often resulting in limited competition.

Comcast

An American telecommunications conglomerate that is one of the world's largest broadcasting and cable television companies.

Time Warner

A former multinational media and entertainment conglomerate headquartered in New York, which was acquired by AT&T in 2018.

Loss-Leader

A pricing strategy where a product is sold at a loss to attract customers, hoping they will make additional purchases of more profitable items.