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1. Briefly discuss the concept of LR analysis.

Ans: when we have qualitative/dichotomous dependent variables we cannot run our ordinary

least squares (OLS) models. OLS models require us to have quantitative, continuous,

unbounded dependent variables. We will instead use logistic regression analysis to determine

how independent variables affect these qualitative dependent variables. Logistic regression is

a non-parametric technique for determining the estimates of independent variables on a

dependent variable. Because it is a non-parametric technique, the test is not as powerful as

OLS regression and other parametric statistical tests. This means that logistic regression will

not pick up relationships between variables as well as OLS regression analysis for a given

number of observations. Therefor the basic understanding of logistic regression is that the

type of regression analysis usually employed when the dependent variable is dichotomous.

2. Define LR model

Ans: Logistic regression is the appropriate regression analysis to conduct when the dependent

variable is dichotomous (binary). Like all regression analyses, the logistic regression is a

predictive analysis.

3. What are the assumptions in LR analysis

1. Ans: The model is correctly specified, i.e.,

variables;

3. The independent variables are not linear combinations of each other.

4. What are the difference between Linear Regression and Logistic Regression?

Ans: 1. Linear regression requires the dependent variable to be continuous i.e. numeric values

(no categories or groups). While logistic regression requires the dependent variable to be

binary - two categories only (0/1).

2. Linear regression is based on ordinary least square estimation. While logistic regression is

based on Maximum Likelihood Estimation.

3. Linear regression needs a linear relationship between the dependent and independent

variables. While logistic regression does not need a linear relationship between the dependent

and independent variables.

4. In Linear regression analysis, error term should be normally distributed. While logistic

regression

does

not

require

error

term

should

be

normally

distributed.

5. Linear regression assumes that residuals are approximately equal for all predicted

dependent variable values. While logistic regression does not need residuals to be equal for

each level of the predicted dependent variable values.

6. Linear regression requires 5 cases per independent variable in the analysis. While logistic

regression needs at least 10 events per independent variable.

iterative process of maximum likelihood.

Ans. To predict outcome variable that is a categorical dichotomy from one or more

categorical or continuous predictor (independent) variables. We use because having a

categorical dichotomy as an outcome variable violates the assumptions of linearity in

normal regression.

6. How estimate unknown parameters for fitting LR model?

Ans: The likelihood function for the pair (Xi, Yi) is written as

Li ( X i ) X i i 1 X i

Y

1 Y i

Since the observations are assumed to be independent, the likelihood function expresses the

values of in terms of known, fixed values for y

n

L( ) Li ( X i )

i 1

n

ln L( ) Li ( X i )

i 1

Maximizing the likelihood (or log likelihood) has no closed-form solution, so a technique like

iteratively reweighted least squares is used to find an estimate of the regression coefficients,

.

Ans: The likelihood ratio test is used to test the null hypothesis that any sub set of the 's is

equal to 0. i.e., we want to test the following hypothesis

H0: 1=2=...=p-1=0 vs Ha: not all of the k in H0 equal zero

Then the LRT statistic is given by:

2 l ( ( 0 ) ) l ( )

( 0)

where l ( ) is the log likelihood of the fitted (full) model (or under H 1) and l ( ) is the

log likelihood of the (reduced) model specified by the null hypothesis (H0) evaluated at

2

the maximum likelihood estimate of that reduced model. This test statistic has a -

distribution with (p-r) degrees of freedom, r is the unknown parameters of the reduced

model.

8. Why linear regression model makes no sense when your dependent Y variable is binary

(only takes the values of 0 or 1)?

Ans: In least-squares regression, we model the dependent variable Y as a linear function of the Xvariables plus a random error that is assumed to have a normal distribution. That is, the ith Yobservation is assumed to have been generated with the following equation:

The key point is that in regular least-squares regression, the error term i has a normal

distribution with mean 0 and standard deviation . This means the Yi must be a continuous

variable (i.e., one that takes values on an interval), not a binary variable (i.e., a variable taking

only the values 0 and 1).

Thus, if we use regular least-squares regression when the dependent variable is binary or

dichotomous (and should be using logistic regression) some of the assumptions are violating

such as the least-squares requirement that the regression errors have a normal distribution.

When the assumptions that underlie the least-squares regression model are violated, we can

no longer rely on the statistical inference (e.g., which regression coefficients are significant)

or predictions that are made based on the least-squares model.

Figure below shows the kind of data that is appropriate for regular least-squares regression Y

vs X:

Figure below shows the kind of data that is appropriate for logistic regression Y vs X:

Ans: Odds: The odds of an event of interest occurring is defined by

odds = p/(1-p)

where p is the probability of the event occurring or success. So if p=0.1, the odds are equal to

0.1/0.9=0.111 (recurring). So here the probability (0.1) and the odds (0.111) are quite similar.

Indeed whenever p is small, the probability and odds will be similar. This is because when p

is small, 1-p is approximately 1, so that p/(1-p) is approximately equal to p.

But when p is large, the probability and odds will generally be quite different. For example if

p=0.5, we have odds=0.5/0.5=1. As p increases, the odds get larger and larger such as p=0.99,

odds=0.99/0.01=99.

Another example, let odds are =0.90/(90-0.10) or 0.90 to 0.10 or 9 to 1 or written as 9/1 or

9:1, means the event of interest will occur once for every 9 times that the event does not

occur. That is in 10 times/replications, we expect the event of interest to happen once and the

event not to happen in the other 9 times.

Odds ratios: In order to understand the output of a logistic regression analysis, you also need

to have some understanding of odds ratios. Odds ratios are frequently used to express the

relative chance of an event happening under two different conditions. So if the odds of thing

A are MA to NA and the odds of thing B are MB to NB then the odds is defined as

MA

OR

MB

NA

NB

We can also write the odds ratio in terms of probabilities. Using the formula given above to

calculate the probabilities gives

PA

MA

PB

MB

MA NA

M B NB

Since, using probabilities, the odds ratio expressed in terms of probabilities is:

OR

PA /(1 PA )

PB /(1 PB )

For Example: Suppose that the probability of a bad outcome is 0.2 if a patient takes the

existing treatment, but that this is reduced to 0.1 if they take the new treatment. The odds of a

bad outcome with the existing treatment is 0.2/0.8=0.25, while the odds on the new treatment

are 0.1/0.9=0.111 (recurring). The odds ratio comparing the new treatment to the old

treatment is then simply the correspond ratio of odds: (0.1/0.9) / (0.2/0.8) = 0.111 / 0.25 =

0.444 (recurring). This means that the odds of a bad outcome if a patient takes the new

treatment are 0.444 that of the odds of a bad outcome if they take the existing treatment. The

odds (and hence probability) of a bad outcome are reduced by taking the new treatment. We

could also express the reduction by saying that the odds are reduced by approximately 56%,

since the odds are reduced by a factor of 0.444.

Ans: A logistic regression is used for predicting the probability of occurrence of an event by

fitting data to a logit function. Let us consider fitted logit function by

log it ( pi ) 0 1 X i

log it ( pi ) log

pi

log(odds )

1 pi

Or we can write

odds1

when X=Xj,

pX j

1 pX j

odds2

when X=Xj+1,

p X j 1

1 p X j 1

0 1 X j

0 1 X j 1

odds1

e 1

odds2

log OR

OR

Ans: Many categorical response variables have only two categories. The observation for each

subject might be classified as a Success or a Failure. Represent these outcomes by 1 and

0. The Bernoulli distribution for binary random variables specifies probabilities

p Y 1 and p Y 0 1

f yi ; i iyi 1 i

1 yi

y

i

i

1 i

1 i

i

1 i exp yi log

1 i

for yi 0 and 1

Q log

the log odds of response 1, is called the logit of . GLMs that use the logit link are called

logit models.

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