Sample Question #66 (statistics)
We have a simple univariate linear regression model which we estimate by OLS:
y = α + βx + ε
Now, what would be the reason why we don’t run a reverse regression like this:
x = η + φy + μ ?
In other words, if the first equation is valid, why isn’t the second equation?
(Comment: this is a relatively easy question, but many people are confused about why and when a variable should be the dependent variable and why and when another variable should be an independent variable)