An R-squared value of 0.75 indicates what?

• A. 25% of variability in the dependent variable is explained by the model
• B. 75% of variability in the dependent variable is explained by the model
• C. The model explains all variability in the dependent variable
• D. The model explains none of the variability in the dependent variable

Answer: (B)

R-squared shows the portion of the total variation in the outcome that the regression model can explain. An R-squared of 0.75 means the model explains 75% of the variability in the dependent variable, while the remaining 25% is due to random variation or factors not included in the model. This rules out the interpretations that only 25% is explained, that all variability is explained, or that none is explained. Keep in mind that a high R-squared indicates a good fit to the observed data, but it doesn’t prove causation and doesn’t guarantee perfection.