Logistic regression – introduction and advantages
Logistic regression applies maximum likelihood estimation after transforming the dependent variable into a logit variable (natural log of the odds of the dependent variable occurring or not) with respect to independent variables. In this way, logistic regression estimates the probability of a certain event occurring. In the following equation, log of odds changes linearly as a function of explanatory variables:
One can simply ask, why odds, log(odds) and not probability? In fact, this is interviewers favorite question in analytics interviews.
The reason is as follows:
By converting probability to log(odds), we have expanded the range from [0, 1] to [- ∞, +∞ ]. By fitting model on probability we will encounter a restricted range problem, and also by applying log transformation, we cover-up the non-linearity involved and we can just fit with a linear combination of variables.
One more question one ask is what will happen if someone fit the linear...