## A. Colin Cameron, Dept. of Economics, Univ. of Calif. - Davis

This January 2009 help sheet gives information on
• Adding a nonlinear trend (exponential, logarithmic, polynomial) to a two-way scatter plot.

SPECIFIC TRENDLINES FOR  A SCATTERPLOT

We first create a scatterplot for the cars data in carsdata.xls
For details see Excel 2007: Two-way Plots

Specifically

• Copy column A to column C (we need HH SIZE first then CARS for an XY scatter plot).
• Highlight columns B and C.
• Choose the Insert Tab and the Charts Group and Scatter and then Scatter Only with markers
• Click on a point within the chart so that all the point on the chart are highlighted (this is tricky)
• Right-click to get options including Add Trendline

Several options are given.
To obtain an exponential trend check this option, as well as Display equation on chart. The various options are

• Logarithmic:  y = c + b*ln(x) + u
This is a linear-log relationship.
• Exponential:  y = c*exp(bx)*u
This is a log-linear relationship since taking logs gives  ln(y) = ln(a) + b*ln(x) + ln(u)
• Power:  y = a*(x^b)*u
This is a log-log relationship since taking logs gives ln(y) = ln(a) + b*ln(x) + ln(u)
• Polynomial: y = a + b*x + c*x^2 + d*x^4 + .... + u
This is for example a quadratic relationship if the poynomial is of order 2.
• Moving average.
This is generally only useful for time series data.

For further information on how to use Excel go to
http://cameron.econ.ucdavis.edu/excel/excel.html