Learn about binary regressions and their applications.
- [Narrator] Another common problem that comes up…when using regressions to try and predict…the outcome of variables that we care about…is that the variable we care about might be unique.…It might have what we refer to as a binary outcome,…meaning that the final outcome…can go one of two possible distinct ways.…For example, if we're trying to predict…the probability of a default on a bank loan,…we can have a customer who defaults…or they don't default.…
There's no in between.…Either the customer pays back the bank over time…or they do not.…Similarly, perhaps you're trying to predict…the risk of a heart attack.…Either an individual has a heart attack or they don't.…We call this type of one or zero outcomes…if you will binary variables.…When we're trying to predict a binary outcome,…we need to use special models.…The two most common models are logit and probit models.…
These forms of regression allow us to predict…discrete variables with a mix of other types of variables…both continuous and discrete as predictors.…
Professor Michael McDonald demonstrates how to harness the wealth of information available on the Internet to forecast statistics such as industry growth, GDP, and unemployment rates, as well as factors that directly affect your business, like property prices and future interest rate hikes. All you need is Microsoft Excel. Michael uses the built-in formulas, functions, and calculations to perform regression analysis, calculate confidence intervals, and stress test your results. He also covers time series exponential smoothing, fixed effects regression, and difference estimators. You'll walk away from the course able to immediately begin creating forecasts for your own business needs.
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- Identify a good source of free data.
- Name the term for the estimate of the impact of an X variable on a Y variable.
- Tell which statistic offers a bounds on the estimate of the impact of an X variable on a Y variable.
- Assess the type of variable that can be used to capture fixed effects.
- Cite the method by which a forecast can be done with a regression.