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publishing as Prentice Hall

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LOGIT MODEL (LOGISTIC REGRESSION)

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Binary Logit Model Formulation

The probability of success may be modeled using the logit model as:

P log = a +a 1 P
e 0

+a

+... +a

Or

P = a X log 1 P
n e i= 0 i i

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Model Formulation

exp( P = 1 + exp(
i =0

a X
i k i =0 i

)
i

a X

Where: P Xi ai = Probability of success = Independent variable i = parameter to be estimated.

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Properties of the Logit Model

Although Xi may vary from to , P is constrained to lie between 0 and 1. When Xi approaches When Xi approaches , P approaches 0. , P approaches 1.

When OLS regression is used, P is not constrained to lie between 0 and 1.

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Estimation and Model Fit

The estimation procedure is called the maximum likelihood method. Fit: Cox & Snell R Square and Nagelkerke R Square. Both these measures are similar to R2 in multiple regression. The Cox & Snell R Square can not equal 1.0, even if the fit is perfect. This limitation is overcome by the Nagelkerke R Square. Compare predicted and actual values of Y to determine the percentage of correct predictions.

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Significance Testing

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Interpretation of Coefficients

If Xi is increased by one unit, the log odds will change by ai units, when the effect of other independent variables is held constant. The sign of ai will determine whether the probability increases (if the sign is positive) or decreases (if the sign is negative) by this amount.

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Explaining Brand Loyalty

Table 18.6
No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Loyalty 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Brand 4 6 5 7 6 3 5 5 7 7 6 5 7 5 7 3 4 2 5 4 3 3 3 4 6 3 4 3 5 1 Product 3 4 2 5 3 4 5 4 5 6 7 6 3 1 5 1 6 5 2 1 3 4 6 4 3 6 3 5 5 3 Shopping 5 4 4 5 4 5 5 2 4 4 2 4 3 4 5 3 2 2 4 3 4 5 3 2 6 3 2 2 3 2

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Results of Logistic Regression

Table 18.7
Dependent Variable Encoding Original Value Not Loyal Loyal Internal Value 0 1

Model Summary -2 Log likelihood 23.471(a) Cox & Snell R Square .453 Nagelkerke R Square .604

Step 1

a Estimation terminated at iteration number 6 because parameter estimates changed by less than .001.

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Results of Logistic Regression

Table 18.7, cont.

a Classification Table
Predicted Loyalty to the Brand Percentage Not Loyal Loyal Correct 12 3 80.0 3 12 80.0 80.0

Observed Step 1 Loyalty to the Brand Overall Percentage

Not Loyal Loyal

a. The cut value is .500 a Variables in the Equation

Step 1 Brand Product Shopping Constant B 1.274 .186 .590 -8.642 S.E. .479 .322 .491 3.346 Wald 7.075 .335 1.442 6.672 df 1 1 1 1 Sig. .008 .563 .230 .010 Exp(B) 3.575 1.205 1.804 .000

a.Variable(s) entered on step 1: Brand, Product, Shopping.

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SPSS Windows The DISCRIMINANT program performs both two-group and multiple discriminant analysis. To select this procedure using SPSS for Windows, click: Analyze>Classify>Discriminant To run logit analysis or logistic regression using SPSS for Windows, click: Analyze > Regression>Binary Logistic

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SPSS Windows: Two-Group Discriminant

1. 2. 3. 4. 5. 6. 7. Select ANALYZE from the SPSS menu bar. Click CLASSIFY and then DISCRIMINANT. Move visit into the GROUPING VARIABLE box. Click DEFINE RANGE. Enter 1 for MINIMUM and 2 for MAXIMUM. Click CONTINUE. Move income, travel, vacation, hsize, and age into the INDEPENDENTS box. Select ENTER INDEPENDENTS TOGETHER (default option). Click on STATISTICS. In the pop-up window, in the DESCRIPTIVES box check MEANS and UNIVARIATE ANOVAS. In the MATRICES box check WITHIN-GROUP CORRELATIONS. Click CONTINUE. Click CLASSIFY... In the pop-up window in the PRIOR PROBABILITIES box, check ALL GROUPS EQUAL (default). In the DISPLAY box, check SUMMARY TABLE and LEAVE-ONE-OUT CLASSIFICATION. In the USE COVARIANCE MATRIX box, check WITHIN-GROUPS. Click CONTINUE. Click OK.
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8.

9.

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SPSS Windows: Logit Analysis

1. 2. 3. 4. Select ANALYZE from the SPSS menu bar. Click REGRESSION and then BINARY LOGISTIC. Move Loyalty to the Brand [Loyalty] into the DEPENDENT VARIABLE box. Move Attitude toward the Brand [Brand], Attitude toward the Product category [Product], and Attitude toward Shopping [Shopping], into the COVARIATES (S box.) Select ENTER for METHOD (default option). Click OK.

5. 6.

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SAS Learning Edition

Both two-group and multiple discriminant analysis can be performed using the Discriminant Analysis task within SAS Learning Edition. To select this task, click: Analyze>Classify>Discriminant Analysis To run logit analysis or logistic regression using SAS Learning Edition, click: Analyze > Regression > Logistic
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SAS Learning Edition : Two-Group Discriminant

1. 2. 3. 4. Select ANALYZE from the SAS Learning Edition menu bar. Click Multivariate and then Discriminant Analysis. Move VISIT to the classification variable task role. Move INCOME, TRAVEL, VACATION, HSIZE, and AGE to the analysis variables task role. 5. Click Options. 6. Select Univariate test for equality of class means and Summary results of cross validation classification. (If means are desired, then use the Summary Statistics task.) 7. Click the Preview Code button. 8. Click the Insert Code button. 9. Double click to insert code before the CROSSVALIDATE option. 10. Add the CAN and PCORR options in the popup box and then click OK. 11. Click OK and then close the Preview Code window. 12. Click Run.
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SAS Learning Edition: Logit Analysis

1. 2. 3. 4. 5. 6. 7. 8. 9. Select ANALYZE from the SAS Learning Edition menu bar. Click Regression and then Logistic. Move LOYALTY to the Dependent variable task role. Move BRAND, PRODUCT, and SHOPPING to the Quantitative variables task role. Select Model Effects. Choose BRAND, PRODUCT, and SHOPPING as Main Effects. Select Model Options. Check Show classification table and enter 0.5 as the critical probability value. Click Run.
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