Ch apter E ightee n

Discriminant and Logit Analysis

18-1
© 2007 Prentice Hall
 Cha pter Ou tl ine
1) Overview
2) Basic Concept
3) Relation to Regression and ANOVA
4) Discriminant Analysis Model
5) Statistics Associated with Discriminant Analysis
6) Conducting Discriminant Analysis
i. Formulation
ii. Estimation
iii. Determination of Significance
iv. Interpretation
v. Validation
18-2
© 2007 Prentice Hall
 Cha pter Ou tl ine
1) Multiple Discriminant Analysis

i. Formulation

ii. Estimation

iii. Determination of Significance

iv. Interpretation

v. Validation

2) Stepwise Discriminant Analysis

18-3
© 2007 Prentice Hall
 Ch apter O utl ine

9) The Logit Model

i. Estimation

ii. Model Fit

iii. Significance Testing

iv. Interpretation of Coefficients

v. An Illustrative Application

10) Summary
18-4
© 2007 Prentice Hall
 Sim il aritie s and Diffe renc es b etwe en
ANO VA , R eg re ss ion , and D isc rim ina nt
An aly sis
Table 18.1

ANOVA REGR ESS ION D ISCR IMIN ANT/LOG IT

Sim il ari ti es
Number of On e On e One
de pen den t
varia bl es
Number of
indep en den t Mu lt ipl e Mu lt ipl e Multi pl e
varia bl es

Differ en ces
Nature of the
de pen den t Me tr ic Me tr ic Categor ic al
varia bl es
Nature of the
indep en den t Ca te goric al Me tr ic Metr ic
varia bl es
18-5
© 2007 Prentice Hall
 Discr imina nt Ana lysis
Discr imi nan t an al ys is is a technique for analyzing data
when the criterion or dependent variable is categorical and
the predictor or independent variables are interval in nature.
The objectives of discriminant analysis are as follows:
 Development of discri min ant fun ct io ns, or linear

combinations of the predictor or independent variables,

which will best discriminate between the categories of the
criterion or dependent variable (groups).
 Examination of whether significant differences exist among

the groups, in terms of the predictor variables.

 Determination of which predictor variables contribute to

most of the intergroup differences.

 Classification of cases to one of the groups based on the

values of the predictor variables.

 Evaluation of the accuracy of classification.
18-6
© 2007 Prentice Hall
 Discr imina nt Ana lysis
 When the criterion variable has two categories, the
technique is known as two -gr oup d iscr imi na nt
analysis.
 When three or more categories are involved, the technique
is referred to as mu ltip le di scr imi nan t an al ys is .
 The main distinction is that, in the two-group case, it is
possible to derive only one discriminant function. In
multiple discriminant analysis, more than one function may
be computed. In general, with G groups and k predictors,
it is possible to estimate up to the smaller of G - 1, or k,
discriminant functions.
 The first function has the highest ratio of between-groups
to within-groups sum of squares. The second function,
uncorrelated with the first, has the second highest ratio,
and so on. However, not all the functions may be 18-7
© 2007 Prentice Hall
 Geometric Interpretation
Fig. 18.1

X2 G1
1 1 2 2
G2
1 1 11 2
1 1 1 1 2
1
2 2
2 22
1 2
21
1 22
22

G1

G2 X1

18-8
© 2007 Prentice Hall
 Discr iminant An alysis Mo del
The dis cr imi nant an alysis model involves linear combinations of
the following form:
D = b0 + b1X1 + b2X2 + b3X3 + . . . + bkXk
Where:
D = discriminant score
b 's = discriminant coefficient or weight
X 's = predictor or independent variable

 The coefficients, or weights (b), are estimated so that the groups differ
as much as possible on the values of the discriminant function.
 This occurs when the ratio of between-group sum of squares to within-
group sum of squares for the discriminant scores is at a maximum.
18-9
© 2007 Prentice Hall
 St ati stics A sso ciated w ith
Discr iminant An alysis
 Ca nonical co rre lat io n. Canonical correlation
measures the extent of association between the
discriminant scores and the groups. It is a measure of
association between the single discriminant function and
the set of dummy variables that define the group
membership.
 Ce ntr oid. The centroid is the mean values for the
discriminant scores for a particular group. There are as
many centroids as there are groups, as there is one for
each group. The means for a group on all the functions
are the group centroids.
 Cl as sif icat ion mat rix . Sometimes also called
confusion or prediction matrix, the classification matrix
contains
© 2007 Prentice Hall the number of correctly classified and 18-10
 Stati sti cs Asso ciated w ith
Discr imina nt Ana lysis
 Discr imi nan t function co ef fici en ts. The discriminant
function coefficients (unstandardized) are the multipliers
of variables, when the variables are in the original units
of measurement.
 Discr imi nan t sco res. The unstandardized coefficients
are multiplied by the values of the variables. These
products are summed and added to the constant term to
obtain the discriminant scores.
 Eig en val ue . For each discriminant function, the
Eigenvalue is the ratio of between-group to within-group
sums of squares. Large Eigenvalues imply superior
functions.
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© 2007 Prentice Hall
 St ati stics A sso ciated w ith
Discr iminant An alysis
 F va lu es an d the ir si gni fican ce . These are calculated
from a one-way ANOVA, with the grouping variable
serving as the categorical independent variable. Each
predictor, in turn, serves as the metric dependent variable
in the ANOVA.
 Group mean s and gro up st an dar d de vi at ions.
These are computed for each predictor for each group.
 Po ole d wi thin -gro up co rrel at io n ma tr ix. The pooled
within-group correlation matrix is computed by averaging
the separate covariance matrices for all the groups.
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© 2007 Prentice Hall
 Stati st ics A sso ciated with
Di sc ri mi nant Ana ly si s
 St anda rdiz ed d is crimin an t fu nct ion coefficient s. The
standardized discriminant function coefficients are the discriminant
function coefficients and are used as the multipliers when the
variables have been standardized to a mean of 0 and a variance of 1.
 St ruc tu re corr elat ions. Also referred to as discriminant loadings,
the structure correlations represent the simple correlations between
the predictors and the discriminant function.
 Tot al c orre la tion ma trix . If the cases are treated as if they were
from a single sample and the correlations computed, a total
correlation matrix is obtained.
 Wilks 'λ . Sometimes also called the U statistic, Wilks'λ for each
predictor is the ratio of the within-group sum of squares to the total
sum of squares. Its value varies between 0 and 1. Large values
of λ (near 1) indicate that group means do not seem to be different.
Small values ofλ (near 0) indicate that the group means seem to be
different.
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© 2007 Prentice Hall
 Co nduc ti ng Di scrim inant
An al ysi s

Fig. 18.2

Formulate the Problem

Estimate the Discriminant Function Coefficients

Determine the Significance of the Discriminant Function

Interpret the Results

Assess Validity of Discriminant Analysis

18-14
© 2007 Prentice Hall
 Co nduc ti ng Di scrim inant An alysi s
Formulate th e Pro bl em
 Identify the objectives, the criterion variable, and the
independent variables.
 The criterion variable must consist of two or more mutually
exclusive and collectively exhaustive categories.
 The predictor variables should be selected based on a
theoretical model or previous research, or the experience
of the researcher.
 One part of the sample, called the estimation or an al ysis
samp le, is used for estimation of the discriminant
function.
 The other part, called the holdout or va li dat ion samp le ,
is reserved for validating the discriminant function.
 Often the distribution of the number of cases in the
analysis and validation samples follows the distribution in
the total sample. 18-15
© 2007 Prentice Hall
 Info rm at ion on Resort Vis it s:
Analys is Sample
Table 18.2
Annual Attitud e Importance Ho use ho ld Ag e of
Amount
Res or t Famil y Toward Attached Si ze Hea d of
Sp ent on N o. Visi t Inc ome
Travel to Fa mily Ho use hold Famil y
($ 00 0) Vaca tion
Vacatio n

1 1 50.2 5 8 3 43 M (2)
2 1 70.3 6 7 4 61 H (3)
3 1 62.9 7 5 6 52 H (3)
4 1 48.5 7 5 5 36 L (1)
5 1 52.7 6 6 4 55 H (3)
6 1 75.0 8 7 5 68 H (3)
7 1 46.2 5 3 3 62 M (2)
8 1 57.0 2 4 6 51 M (2)
9 1 64.1 7 5 4 57 H (3)
10 1 68.1 7 6 5 45 H (3)
11 1 73.4 6 7 5 44 H (3)
12 1 71.9 5 8 4 64 H (3)
13 1 56.2 1 8 6 54 M (2)
18-16
© 200714Prentice Hall1 49.3 4 2 3 56 H (3)
 Info rm at ion on Resort Vis it s: Ana lys is
Sam pl e
Table 18.2, cont.Annual Attitud e Importance Ho use ho ld Ag e of
Amou nt
Res ort Famil y Tow ar d A ttached Si ze Hea d o f
Sp ent on N o. Visi t
Income Travel to Fam ily Ho use hol d Famil y
($ 000) V ac ation
Vacati on

16 2 32.1 5 4 3 58 L (1)
17 2 36.2 4 3 2 55 L (1)
18 2 43.2 2 5 2 57 M (2)
19 2 50.4 5 2 4 37 M (2)
20 2 44.1 6 6 3 42 M (2)
21 2 38.3 6 6 2 45 L (1)
22 2 55.0 1 2 2 57 M (2)
23 2 46.1 3 5 3 51 L (1)
24 2 35.0 6 4 5 64 L (1)
25 2 37.3 2 7 4 54 L (1)
26 2 41.8 5 1 3 56 M (2)
27 2 57.0 8 3 2 36 M (2)
28 2 33.4 6 8 2 50 L (1)
29
© 2007 Prentice Hall
2 37.5 3 2 3 48 L (1) 18-17
 Info rm ati on on Re sort Vis it s:

Hol dout Sam ple

Table 18.3
Annual Attitud e Importance Ho use ho ld Ag e of
Amount
Res or t Famil y Tow ard Attached Si ze Hea d of
Sp ent o n N o. Visi t
Income Travel to F am ily Ho use hol d
Famil y
($ 00 0) Va cation
Vacati on

1 1 50.8 4 7 3 45 M(2)
2 1 63.6 7 4 7 55 H (3)
3 1 54.0 6 7 4 58 M(2)
4 1 45.0 5 4 3 60 M(2)
5 1 68.0 6 6 6 46 H (3)
6 1 62.1 5 6 3 56 H (3)
7 2 35.0 4 3 4 54 L (1)
8 2 49.6 5 3 5 39 L (1)
9 2 39.4 6 5 3 44 H (3)
18-18
© 2007 10
Prentice Hall 2 37.0 2 6 5 51 L (1)
 Con duc ting D isc rimi na nt A na lysi s
Esti ma te t he Di sc ri mi nant
Func tion C oef fic ient s

 The dire ct me tho d involves estimating the

discriminant function so that all the predictors are
included simultaneously.

 In st ep wi se dis crimin an t an aly sis , the

predictor variables are entered sequentially, based
on their ability to discriminate among groups.

18-19
© 2007 Prentice Hall
 Ana lys is
Table
     18.4
GROUP MEANS
VISIT INCOME TRAVEL VACATION HSIZE AGE

1 60.52000 5.40000 5.80000 4.33333 53.73333

2 41.91333 4.33333 4.06667 2.80000 50.13333
Total 51.21667 4.86667 4.9333 3.56667 51.93333

Group Standard Deviations

1 9.83065 1.91982 1.82052 1.23443 8.77062

2 7.55115 1.95180 2.05171 .94112 8.27101
Total 12.79523 1.97804 2.09981 1.33089 8.57395

Pooled Within-Groups Correlation Matrix

INCOME TRAVEL VACATION HSIZE AGE

INCOME 1.00000
TRAVEL 0.19745 1.00000
VACATION 0.09148 0.08434 1.00000
HSIZE 0.08887 -0.01681 0.07046 1.00000
AGE - 0.01431 -0.19709 0.01742 -0.04301 1.00000

Wilks' (U-statistic) and univariate F ratio with 1 and 28 degrees of freedom

Variable Wilks' F Significance

INCOME 0.45310 33.800 0.0000

TRAVEL 0.92479 2.277 0.1425
VACATION 0.82377 5.990 0.0209
HSIZE 0.65672 14.640 0.0007
AGE 0.95441 1.338 0.2572
Co nt.
18-20
© 2007 Prentice Hall
Resu lts of Two -G ro up Di sc rim ina nt
Ana lysi s
Table 18.4, cont.
CAN ON ICAL DISCR IM IN ANT F UN CT IONS
% of Cum C anon ica l Aft er Wilks '
Fun ction Eig env alue Var ia nce % Co rrelatio n Funct ion λ Ch i-s quare d f Si gnifi cance
: 0 0 .35 89 26 .130 5 0.00 01
1* 1.78 62 10 0.00 1 00 .00 0 .800 7 :

* marks t he 1 canon ical d isc riminan t fun ctio ns remaining in the analy sis .

Stand ard Cano nical Dis criminan t Funct ion Co eff icients
FUN C 1

INCO ME 0.74 30 1
TR AV EL 0.09 61 1
VACA TI ON 0.23 32 9
HSI ZE 0.46 91 1
AG E 0.20 92 2

Structure Matri x:
Po oled within -gr oup s c or relations be twee n dis cr iminating vari ables & canon ical d isc riminan t fu nctio ns
(variables or dered by siz e o f co rr elation within fu nctio n)

FUN C 1

INCO ME 0.82 20 2
HSI ZE 0.54 09 6
VACA TI ON 0.34 60 7
TR AV EL 0.21 33 7
AG E 0.16 35 4 Co nt.
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© 2007 Prentice Hall
Res ults of Tw o-G ro up Di sc rim ina nt
Analys is
Table 18.4, cont.

Un st anda rdized Ca no nica l Discrim ina nt Fun ct ion Coefficient s

FUNC 1
INCO ME 0. 84 76 710 E- 01
TRAV EL 0. 49 64 455 E- 01
VA CA TI ON 0. 12 02 813
HSI ZE 0. 42 73 893
AG E 0. 24 54 380 E- 01
(co nst ant ) -7.97 54 76
Ca non ical discrim ina nt fun ct ions evalua ted at grou p means (grou p cent ro ids )

Gro up FUNC 1
1 1.2 911 8
2 -1.29 11 8
Cla ssifica tion result s fo r cases sel ect ed for use in ana ly sis
Pr edict ed Gro up Memb ersh ip
Ac tua l Grou p No . of Ca ses 1 2

Gro up 1 15 12 3
80 .0 % 20 .0 %

Gro up 2 15 0 15
0. 0% 10 0. 0%
Per cent of gro uped ca ses co rrect ly cla ssifi ed : 90. 00 %
Co nt.

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© 2007 Prentice Hall
Res ults of Tw o-G ro up Di sc rim ina nt
Analys is
Table 18.4, cont.

Clas si fication Re sult s for cases n ot selec te d for use

in the anal ysi s (ho ldou t sa mple )
Predicted Group Membership
Actual Group No. of Cases 1 2
Group 1 6 4 2
66.7% 33.3%
Group 2 6 0 6
0.0% 100.0%
Percent of grouped cases correctly classified: 83.33%.

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© 2007 Prentice Hall
 Con duc ting Di scr imi na nt A na lysi s
De term ine t he S ign if icanc e o f
Di sc ri mi nant Func tio n
 The null hypothesis that, in the population, the means of all
discriminant functions in all groups are equal can be
statistically tested.
 In SPSS this test is based on Wilks'λ . If several functions
are tested simultaneously (as in the case of multiple
discriminant analysis), the Wilks' λ statistic is the product of
the univariate for each function. The significance level is
estimated based on a chi-square transformation of the
statistic.
 If the null hypothesis is rejected, indicating significant
discrimination, one can proceed to interpret the results.
18-24
© 2007 Prentice Hall
 Int erpre t t he R esul ts
 The interpretation of the discriminant weights, or coefficients, is similar to
that in multiple regression analysis.
 Given the multicollinearity in the predictor variables, there is no
unambiguous measure of the relative importance of the predictors in
discriminating between the groups.
 With this caveat in mind, we can obtain some idea of the relative
importance of the variables by examining the absolute magnitude of the
standardized discriminant function coefficients.
 Some idea of the relative importance of the predictors can also be
obtained by examining the structure correlations, also called canonical
loadings or discriminant loadings. These simple correlations between each
predictor and the discriminant function represent the variance that the
predictor shares with the function.
 Another aid to interpreting discriminant analysis results is to develop a
Ch arac teri sti c prof il e for each group by describing each group in terms
of the group means for the predictor variables.

18-25
© 2007 Prentice Hall
 Conduc ting Di sc rim inant Ana lys is
Asses s Vali dit y of Di scr im ina nt A nal ys is
 Many computer programs, such as SPSS, offer a leave-one-out
cross-validation option.
 The discriminant weights, estimated by using the analysis
sample, are multiplied by the values of the predictor variables in
the holdout sample to generate discriminant scores for the
cases in the holdout sample. The cases are then assigned to
groups based on their discriminant scores and an appropriate
decision rule. The hit rat io, or the percentage of cases
correctly classified, can then be determined by summing the
diagonal elements and dividing by the total number of cases.
 It is helpful to compare the percentage of cases correctly
classified by discriminant analysis to the percentage that would
be obtained by chance. Classification accuracy achieved by
discriminant analysis should be at least 25% greater than that
obtained by chance.
18-26
© 2007 Prentice Hall
Re sul ts o f Three -Gro up D isc rimi na nt
Analy sis
Table 18.5
Grou p Me an s
AM OUN T INCO ME TR AV EL VACA TI ON HSI ZE AG E
1 38.57 000 4. 500 00 4.70 000 3 .100 00 50 .3000 0
2 50.11 000 4. 000 00 4.20 000 3.40 00 0 49 .5000 0
3 64.97 000 6. 100 00 5.90 000 4 .200 00 56 .0000 0
Total 51.21 667 4. 866 67 4.93 333 3 .566 67 51 .9333 3

Grou p Stand ard D evi ation s

1 5.297 18 1. 715 94 1.88 856 1.19 72 2 8.09 732
2 6.002 31 2. 357 02 2.48 551 1.50 55 5 9.25 263
3 8.614 34 1. 197 22 1.66 333 1.13 52 9 7.60 117
Total 12.79 523 1. 978 04 2.09 981 1.33 08 9 8.57 395

Pooled With in -G rou ps Correlati on Matri x

INCO ME TR AV EL VACA TI ON HSI ZE AG E
INCO ME 1.000 00
TRA VEL 0.051 20 1. 000 00
VACAT ION 0.306 81 0. 035 88 1.00 000
HSI ZE 0.380 50 0. 004 74 0.22 080 1.00 00 0
AG E -0.209 39 -0.34 02 2 -0 .01 32 6 -0. 025 12 1.00 000 Co nt.
18-27
© 2007 Prentice Hall
Re sul ts o f Three -Gro up D isc rimi na nt
Analy sis
Table 18.5, cont.
Wi lk s' (U-st at ist ic) and un iv ari ate F rat io wit h 2 and 2 7 deg rees of freed om .
Var iable Wilk s' L ambda F Sig nifi cance

INCO ME 0.26 21 5 38.00 0.00 00

TRA VEL 0.78 79 0 3 .634 0.04 00
VACAT ION 0.88 06 0 1 .830 0.17 97
HSI ZE 0.87 41 1 1 .944 0.162 6
AG E 0.88 21 4 1 .804 0.18 40

CANONI CAL DISC RI MINA NT FUNCT IONS

% of Cum C anoni ca l After Wi lks '
Fun ction Eig env alue Vari ance % Co rrelatio n Funct ion λ Chi -s quare df
Sig nifi cance
: 0 0.16 64 44 .831 10 0.00
1* 3.81 90 9 3.93 93 .93 0 .890 2 : 1 0.80 20 5 .51 7
4 0.24
2* 0.24 69 6.07 1 00.0 0 0 .445 0 :

* marks t he two canon ical disc rimin ant fu nctio ns remainin g in the analy si s.

St and ard ize d Ca no ni cal Disc rimi na nt Funct ion Coeff ici ent s
FUN C 1 FUN C 2
INCO ME 1.04 740 -0 .420 76
TRA VEL 0.33 991 0.76 851
VACAT ION -0 .141 98 0.53 354
HSI ZE -0 .163 17 0.12 932 Co nt.
AG E 0.49 474 0.52 447
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© 2007 Prentice Hall
 Resul ts of T hree -Group Discr imi na nt
Ana lysi s
Table 18.5, cont.
Structure Matr ix:
Pooled wi th in- gr oup s co rr el atio ns betwe en d iscr iminating variab les and canon ical
dis crimin ant functio ns (v aria ble s o rde re d b y si ze o f correl atio n w ithin f unctio n)

FUN C 1 FUN C 2
INCO ME 0.85 55 6* -0 .278 33
HSI ZE 0.19 31 9* 0.07 74 9
VACATI ON 0.21 93 5 0.58 82 9*
TR AV EL 0.14 89 9 0.45 36 2*
AG E 0.16 57 6 0.34 07 9*

Un stand ard ize d cano nical d is cri mina nt functio n co eff icients
FUN C 1 FUN C 2
INCO ME 0.15 42 658 -0 .619 714 8E- 01
TR AV EL 0.18 67 977 0.42 23 430
VACATI ON -0 .695 226 4E- 01 0.26 12 652
HSI ZE -0 .126 533 4 0.10 02 796
AG E 0 .592 805 5E- 01 0.62 84 206 E-0 1
(co nstant) -1 1.09 442 -3 .791 600

Cano nica l d iscri minant f unctio ns eval uated a t gro up mea ns (g ro up centro ids)
Gro up FUN C 1 FUN C 2
1 -2 .041 00 0.41 84 7
2 -0 .404 79 -0 .658 67
3 2 .445 78 0.24 02 0 Co nt.
18-29
© 2007 Prentice Hall
Re sul ts o f Three -Gro up D isc rimi na nt
Analy sis
Table 18.5, cont.
Classi fic at ion Re sul ts:
Pr edi cted Gro up M embers hip
Actual Grou p No. o f Cas es 1 2 3

Gr oup 1 10 9 1 0
90 .0% 10 .0% 0.0%

Gr oup 2 10 1 9 0
10 .0% 90 .0% 0.0%

Gr oup 3 10 0 2 8
0.0% 20 .0% 80 .0%
Perc ent of gr ouped cases c orr ectly clas sif ied: 8 6.67 %

Classi fic at ion resul ts for cases n ot sel ect ed for use in the
ana lysi s
Pr edi cted Gro up M embers hip
Actual G ro up No. o f C ases 1 2 3

Gro up 1 4 3 1 0
75 .0% 25 .0% 0.0%

Gro up 2 4 0 3 1
0.0% 75 .0% 25 .0%

Gro up 3 4 1 0 3
25 .0% 0.0% 75 .0%
Perc ent of gr ouped cases c orr ectly clas sif ied: 7 5.00 % 18-30
© 2007 Prentice Hall
 Al l-Groups S ca tter gram
Fig. 18.3

Acros s: Functi on
1
Down : Fu nct ion 2
4.
0 1 1
1 *1 3
23 3 *3 3
1 1 12 * 3 3
0. 1 1 2 2
3
0 1 2 2
2
-4.0

* in dic ates a grou p

ce ntroid

-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0

18-31
© 2007 Prentice Hall
 Te rrit orial Ma p
Fig. 18.4

13
13
13 Acr oss: Function 1
8.0 Down : Fu ncti on 2
13
13 * Ind icates a
13
group centro id
13
4.0 113
1 1 2
31 1 2 2 3 3
*1 1 1 2 2 2 2 3 3 *
1 1 2 * 2 2 3
0.0 12 1 2 2 3 3
1 1 22 2 2 3 3
1 121 2 2 2 3
2 3 3
-4.0 1 21 2 2
21 1 2 2 2 3
1 1 21 2 2 3 3
1 12 1 2 2 2 2 3 3
1 1 2 2 2 3
-8.0 1 1 1 22 2 2 3 3

-8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 18-32
© 2007 Prentice Hall
 St epw ise Discr imi na nt Ana lys is
 Stepwise discriminant analysis is analogous to stepwise
multiple regression (see Chapter 17) in that the predictors
are entered sequentially based on their ability to
discriminate between the groups.
 An F ratio is calculated for each predictor by conducting a
univariate analysis of variance in which the groups are
treated as the categorical variable and the predictor as the
criterion variable.
 The predictor with the highest F ratio is the first to be
selected for inclusion in the discriminant function, if it
meets certain significance and tolerance criteria.
 A second predictor is added based on the highest adjusted
or partial F ratio, taking into account the predictor already
selected.
18-33
© 2007 Prentice Hall
 Stepw ise D iscr imi na nt Ana lys is
 Each predictor selected is tested for retention based on its
association with other predictors selected.
 The process of selection and retention is continued until all
predictors meeting the significance criteria for inclusion and
retention have been entered in the discriminant function.
 The selection of the stepwise procedure is based on the
optimizing criterion adopted. The Mah ala no bi s
pr oce du re is based on maximizing a generalized measure
of the distance between the two closest groups.
 The order in which the variables were selected also
indicates their importance in discriminating between the
groups.
18-34
© 2007 Prentice Hall
 Th e Logi t Mo del

 The dependent variable is binary and there are

several independent variables that are metric
 The binary logit model commonly deals with
the issue of how likely is an observation to
belong to each group
 It estimates the probability of an observation
belonging to a particular group

18-35
© 2007 Prentice Hall
 Bi na ry Log it Mo del Formul ati on

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

 P 
Or log   = a +a X +a X +... +a X
1 − P 
e 0 1 1 2 2 k k

 P = n

Or log   ∑a X
1 − P 
e i i
i= 0

18-36
© 2007 Prentice Hall
 Mo del F ormu latio n

exp( ∑ a X )
P =
i i
i =0

1 + exp(
k

∑ a X
i =0
i i )

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

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 Prop erti es of the Lo git Model

 Although Xi may vary from − ∞ to + ∞ , P is

constrained to lie between 0 and 1.

 When Xi approaches − ∞ , P approaches 0.

 When Xi approaches + ∞, P approaches 1.

 When OLS regression is used, P is not constrained

to lie between 0 and 1.

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 Es ti mati on a nd Mod el F it
 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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 Signi fi can ce Tes ting

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 Inte rpre tati on o f Co eff ici ents

 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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 Ex plai ning Bran d Lo yal ty
Table 18.6
No. Loyalty Brand Product Shopping
1 1 4 3 5
2 1 6 4 4
3 1 5 2 4
4 1 7 5 5
5 1 6 3 4
6 1 3 4 5
7 1 5 5 5
8 1 5 4 2
9 1 7 5 4
10 1 7 6 4
11 1 6 7 2
12 1 5 6 4
13 1 7 3 3
14 1 5 1 4
15 1 7 5 5
16 0 3 1 3
17 0 4 6 2
18 0 2 5 2
19 0 5 2 4
20 0 4 1 3
21 0 3 3 4
22 0 3 4 5
23 0 3 6 3
24 0 4 4 2
25 0 6 3 6
26 0 3 6 3
27 0 4 3 2
28 0 3 5 2
29 0 5 5 3
30 0 1 3 2
 
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 Resu lts of Log isti c Re gres si on
Table 18.7

Dependent Vari able Enc oding

Original Value Internal Value

Not Loyal 0
Loyal 1

M odel Su m m ary

-2 Log Cox & Snell Nagelkerke R

Step likelihood R Square Square
1 23.471(a) .453 .604
a Estimation terminated at iteration number 6 because parameter estimates changed by less than .001.

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 Resu lts of Log isti c Regres si on
Table 18.7, cont.
Cl ass if icati on Ta ble a
Predicted

Loyalty to the Brand Percentage

Observed Not Loyal Loyal Correct
Step 1 Loyalty to the Not Loyal 12 3 80.0
Brand Loyal 3 12 80.0
Overall Percentage 80.0

a. The cut value is .500

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

a.Variable(s) entered on step 1: Brand, Product, Shopping. 18-44

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 SP SS Wi ndow s

The DISCRIMINANT program performs both two-

group and multiple discriminant analysis. To select
this procedure using SPSS for Windows click:

An aly ze> Cl assi fy>D iscri min ant …

The run logit analysis or logistic regression using SPSS

for Windows, click:

 An aly ze > Reg ress io n>Bin ary Logisti c …

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 SPSS Wi ndo ws: Two- gro up
Dis cri mi nant
1. Select ANALYZE from the SPSS menu bar.
2. Click CLASSIFY and then DISCRIMINANT.
3. Move “visit” in to the GROUPING VARIABLE box.
4. Click DEFINE RANGE. Enter 1 for MINIMUM and 2 for MAXIMUM. Click
CONTINUE.
5. Move “income,” “travel,” “vacation,” “hsize,” and “age” in to the
INDEPENDENTS box.
6. Select ENTER INDEPENDENTS TOGETHER (default option)
7. 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.
8. 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.
9. Click OK.
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 SP SS Wi ndow s: Logi t An alysi s
1. Select ANALYZE from the SPSS menu bar.

2. Click REGRESSION and then BINARY LOGISTIC.

3. Move “Loyalty to the Brand [Loyalty]” in to the

DEPENDENT VARIABLE box.

4. Move “Attitude toward the Brand [Brand},” “Attitude

toward the Product category [Product},” and “Attitude
toward Shopping [Shopping],” in to the
COVARIATES(S box.)

5. Select ENTER for METHOD (default option)

6. Click OK.
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