u05d1 Interpretation of Odds

Discuss the use of odds in logistic regression. Using some very simple numbers, make up a
simple numerical example and explain how odds and probabilities were calculated. How are
odds different from an odds ratio?
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Binary logistic regression is generally similar to multiple linear regression analyses in that both
seek to predict an outcome on the Y dependent variable from two or more predictor variables.
The main difference is binary logistic regression uses a dichotomous, instead of a quantitative Y
outcome variable to predict the nature of the relationship between predictor variables and group
membership. Since binary logistic regression uses a dichotomous outcome variable to represent
group membership, it does not satisfy assumptions of normality, equal variances across groups
and linearity unless the outcome variable is logistically transformed. However, it is important to
note that it is still imperative for a researcher to engage in preliminary data screening to examine
the presence of extreme outliers and whether the expected frequencies are greater than 5 (Warner,
2008).
Since the relationship between the predictors and dependent variable is not linear, the outcome
variable must be transformed by the natural logarithm of a ratio of odds to create a new variable
called a logit (L). This transformational statistical procedure allows scores on L to satisfy
assumptions of a linear regression model, thus rendering the probability estimates of the
regression equation more interpretable.
Odds are calculated by dividing the number of times an outcome of interest occurs by how many
times it does not occur with a minimum value is 0 and no upper limit. When odds are greater
than 1, the target even is more likely to happen, equal to 1 means equal chance of happening and
less than one indicates less of a chance of the target event happening. The odds ratio is a
comparison of odds of two different groups and has a lower limit of 0 and no fixed upper limit.
A ratio of odds is entered into the logit equation to determine the logit value (Li) compared to the
observed odds. Appropriate B coefficient values are entered into the logistic regression equation
to determine probabilities of group membership which most accurately represent observed group
membership.
A simple example of a binary logistic regression analysis would be determining the probability
of having heart disease (Y = 1) or no heart disease (Y = 0) among smokers (X = 1) and nonsmokers (X = 0). Say the odds of having heart disease among smokers is 60/40 = 1.50.
Therefore, the probability of having heart disease among smokers 1.5 times greater than not
having heart disease. So the odds ratio for heart disease among smokers is 60/40 / 40/60 = 2.25.

Therefore, the probability of having heart disease among smokers 2.25 times greater than among
non-smokers.
Anthony Rhodes
General Psychology PhD

References
Warner, R.M. (2008). Applied statistics: From Bivariate Through Multivariate Techniques.
Thousand Oaks, CA: Sage Publications. ISBN: 9780761927723.