Graphical Tests for Heteroskedasticity

In the regression shown in Figure 1, we see that the data points are fairly uniformly distant from the regression line, indicating that the residuals are evenly dispersed.

Heteroskedasticity graphical approach

Figure 1 – Homoskedasticity

On the other hand, the points on the right side of the regression shown in Figure 2 seem to be farther from the regression line than those on the left. This is indicative of potential heteroskedasticity, although it is not clear whether this sort of difference is sufficient to say that the data is heteroskedastic.

Heteroskedasticity graph

Figure 2 – Heteroskedasticity?

In Breusch-Pagan Test and White Test, we describe two tests that can be used to clarify the situation.