R Square: Interpretation, Usage and Varieties

R Square or coefficient of determination is a measure of goodness of fit of the fitted regression line to a set of considered data. It’s correct interpretation, usage and varieties of are the leverage and privilege of great economists. 

In the case of simple regression we use the term ‘coefficient of determination’ and in case of multiple regression we use the term R-Squared(R^2).

Adjusted R^2

What does r squared and adjusted R squared mean?

R square indicates the percentage of variation of Y(Dependent Value) explained by the X (Independent Value).

It’s value lies between 0 to 1. 

Adjusted R square takes into account the loss of freedom due to additional independent variables. 

What does adjusted R Squared value tell you? Is it better than R square? Which one should I use?

Why adjusted R squared is smaller/larger than R squared?

How is adjusted R square calculated?

McFadden R^2

When to use McFadden R square?

Predicted R^2

Count R^2

Pseudo R^2


Fitted R^2