1. Linear Discriminant Analysis and Logistic Regression

2. Background Linear Discriminant Analysis predicts a categorical variable based on one or more metric independent variables

3. Example Data Age Purchase Consider purchase data compared to a person’s age. A 0 value for Purchase represents someone who didn’t buy, while a 1 represents someone who did.

4. Graph Interpretation Potential customers who did purchase Age Purchase Potential customers who did not purchase

5. Graphical Representation Age Purchase A discriminant analysis fits a linear regression to this data as though the categorical variable was numerical.

6. Graphical Representation ctd. Age Purchase Then the Discriminant Analysis determines a cutoff score. For a single predictor variable, this score is where the regression line is equal to.5. Any data points to the left of the line are predicted to be 0, while those to the right are predicted to be 1. For this data, any potential customer below the age of 41 is predicted not to buy, while anyone older is predicted to buy.

7. A 100% Accurate Discriminate Analysis Even a discriminant analysis that provides perfect separation between purchasers and non-purchasers does not have a perfect R. 2

8. Classification Accuracy Standard Error measures the distance of the predicted value (the regression line) from the observed values. Even data points that are correctly predicted will contribute to the error calculation. Classification accuracy is a better measure. This distance will lower the total R, even though it is a correct classification. 2

9. Discriminant Analysis in StatTools

11. StatTools – Interpreting Output Actualvalues Predicted Values Correct Predictions

12. StatTools – Interpreting Output ctd. Actualvalues Predicted Values False Negatives False Positives Overall Accuracy

13. Logistic Regression A logistic regression fits a sigmoid, or S-shaped curve instead of a straight line. On some datasets, this will provide greater classification accuracy.

14. Logistic Regression in StatTools

16. StatTools – Interpreting Output Age is highly statistically significant Overall Accuracy

17. Comparison Discriminant Analysis Can be used for dependent variables with more than 2 possible values Logistic Regression Less reliant on basic assumptions of the data like normality and constant variance More accurate on borderline points for some datasets