Grouping and linear regression

With a large number of observations, the method of grouping is often employed to provide simpler graphs or tables. When one investigates the relationship between two variables, one usually groups based on the magnitude of the independent variable, and then plots the dependent variable averages against independent variable averages to get a clearer graph. If grouping is based on the magnitude of the dependent variable, the plot of group means as indicated above does not appropriately describe the relationship of the dependent variable to the independent variable. These results are demonstrated theoretically for the special case of bivariate normality (and thus linear regression), but would be expected to be similar for other distribution assumptions. An example is given from an epidemiological study.