18. HDI revisited The United Nations Development Programme (UNDP) uses the Human Development Index (HDI) in an attempt to summarize in one number the progress in health, education, and economics of a country. The number of phone subscribers per 100 people is positively associated with economic progress in a country. Can the number of phone subscribers be used to predict the HDI? Here is a scatterplot of HDI against phone subscribers:

a) Explain why fitting a linear model to these data might be misleading.

b) If you fit a linear model to the data, what do you think a scatterplot of residuals vs. predicted HDI will look like?

HDI 0.8 0.6 0.4- 0.2+ + + 0 50 100 150 200 250 Phone Subscribers