Analysis of dependent binary variable Y on independent variables X

Logistic regression

Logistic regression finds prediction equation based on independent variables that are used to classify individuals into one of two possible groups. The linear-logistic model is:

P(Y=y₂) = 1- P(Y=y₁)

This model may be transformed into linear form as follows:

There are two objectives in a logistic regression:
1. Finding a predictive equation for classifying new individuals
2. Interpreting the predictive equation to better understand the relationships that may exist among the variables.

Example: Does depend appearance of serious insurance event (Y) on age (X₁), gender (X₂), education (X₃) and income (X₄) of insured? How can insurance company guess from personal information of potential client whether he will or won't have serious insurance event?