1. Module 5, Lesson 1: Logistic Regression (244-259)
Interpreting the Estimated Coefficients, bi
Coefficient is Log Odds… (enter in online calculator to get Odds and Probability p). Odds is p/(1-p)
Taking exp(bj) (to get rid of the log) tells us how the odds-ratio of y=1 changes for every unit change in xj
Example: bcreditScore = (enter in “Log Odds” of online calculator)
From online calculator, Odds = 0.5 (0.5016) = 1/2
Meaning: for the same income, loan, and existing debt, the odds-ratio of default is halved for every point increase in credit score
From online calculator, Probability (p) = 0.334
Meaning: for the same income, loan, and existing debt, the probability of default goes down 16.6% (pure coincidence base case of .5 minus .334) for every point increase in credit score
Standard packages return the significance of the coefficients in the same way as in linear regression
One online calculator: