Econometrics · intro
What moves on the Linear Regression & OLS diagram
Squared loss makes OLS chase extreme points: a single high-leverage outlier can rotate the entire fitted line. Robust checks and plots exist for exactly this reason.
OLS minimizes SQUARED errors, so big misses dominate the fit.
One mistyped observation lands far from the cloud.
The whole line tilts toward the outlier, dragged by its enormous squared residual.
One bad point moved every prediction. Always plot your data before you trust your regression.
Examiners ask this as: outlier, data error, influential observation, typo in data, leverage point.
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