Heteroscedasticity

Heteroscedasticity occurs when the variability or spread of data points in a graph changes across different levels of an independent variable, rather than remaining constant. In simple terms, it means that the amount of fluctuation or noise in the data varies depending on the value being measured. For example, in a scatter plot showing income versus savings, if higher incomes have more unpredictable savings patterns, this indicates heteroscedasticity. Recognizing this pattern is important in statistical analysis because it affects the accuracy and reliability of models used to make predictions or understand relationships within data.