Examples. Heteroscedasticity often occurs when there is a large difference among the sizes of the observations. A classic example of heteroscedasticity is that of income versus expenditure on meals. As one’s income increases, the variability of food consumption will increase.
What does Homoscedasticity mean in statistics?
In regression analysis , homoscedasticity means a situation in which the variance of the dependent variable is the same for all the data. Homoscedasticity is facilitates analysis because most methods are based on the assumption of equal variance.
What does heteroscedasticity mean in regression?
Heteroskedasticity refers to situations where the variance of the residuals is unequal over a range of measured values. When running a regression analysis, heteroskedasticity results in an unequal scatter of the residuals (also known as the error term).