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Someone tells you that the leverage of the ith point in a regression model is 0.20....

Someone tells you that the leverage of the ith point in a regression model is 0.20. In non-technical language, what specifically does leverage measure? Is high leverage always bad?

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Answer #1

Leverage is a measure of how far an observation on the predictor variable (say X) from the mean of the predictor variable.

High-leverage points are those observations, if any, made at extreme or outlying values of the independent variables such that the lack of neighboring observations means that the fitted regression model will pass close to that particular observation(s) ( means the residual for those observations will be close to zero ) . Hence high leverage point is not that good at all .

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