Why We Use Durbin Watson Test?

The Durbin Watson statistic is a test statistic used in statistics to detect autocorrelation in the residuals from a regression analysis. The Durbin Watson statistic will always assume a value between 0 and 4. A value of DW = 2 indicates that there is no autocorrelation.

Why we use Durbin Watson?

In statistics, the Durbin–Watson statistic is a test statistic used to detect the presence of autocorrelation at lag 1 in the residuals (prediction errors) from a regression analysis. It is named after James Durbin and Geoffrey Watson.

When can you use Durbin Watson?

1 Answer. You can also use this test to detect spatial autocorrelation. A random shock affecting sales in one region may also cause sales in an adjacent region to change because of close economic ties between them. Weather shocks are another example.