Trevor is modeling monthly incurred dental claims. Trevor has 48 monthly claims observations and three potential predictors:
Trevor obtained the following results from a linear regression:
| Coefficient | Standard Error | t Stat | p-value | |
|---|---|---|---|---|
| Intercept | –45,765,767.76 | 20,441,816.55 | –2.24 | 0.0303 |
| Number ofweekdays | 513,280.76 | 233,143.23 | 2.20 | 0.0330 |
| Number ofweekend days | 280,148.46 | 483,001.55 | 0.58 | 0.5649 |
| Average numberof members | 38.64 | 6.42 | 6.01 | 0.0000 |
Determine which of the following variables should be dropped, using a 5% significance level.
Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
Key: C
Only variables with a p-value greater than 0.05 should be considered. Because only one of the variables (Number of weekend days) meets this criterion, it should be dropped.
Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.