Limitations of Regression Analysis

In making estimates from a regression equation, it is important to remember that the assumption is being made that relationship has not changed since the regression equation was computed. Another point worth remember is that the relationship shown by the scatter diagram may not be the same if the equation is extended beyond the values used in computing the equation. For example, there may be a close linear relationship between the yield of a crop and the amount of fertilizer applied, with the yield increasing as the amount of fertilizer is increased. It would not be logical, however, to extend this equation beyond the limits of the experiment for it is quite likely that if the amount of fertilizers were increased indefinitely, the yield would eventually decline as too much fertilizer was applied.

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