Poisson Regression Models

&
Negative Binomial Regression
Models
• In many a phenomena the regressand is of the count type,
• such as the number of visits to a zoo in a given year,
• the number of patents received by a firm in a year,
• the number of visits to a dentist in a year,
• the number of speeding tickets received in a year, the
• number of cars passing through a toll booth in a span of, say, 5 minutes, etc.
• The underlying variable in each case is discrete, taking only a finite non-negative
number of values.
• Sometimes count data also include rare or infrequent occurrences, such as getting
• hit by lightning in a span or a week,
• having one or more traffic accidents in a span of a day,
• the number of appointments to the Supreme Court made by a President in a year etc
• A unique feature of all these examples is that they take a finite number of non-
negative integer, or count, values.
• Not only that, in many cases the count is 0 for several observations.
• Also note that each count example is measured over a certain finite time period.
• To model such phenomena, we need a probability distribution that takes into account
the unique features of count data.
• One such probability distribution is the Poisson probability distribution.
• Regression models based on this probability distribution are known as Poisson
Regression Models (PRM).
• An alternative to PRM is the Negative Binomial Regression Model (NBRM), which is
based on the Negative binomial probability distribution and is used to remedy some of
the deficiencies of the PRM.
Example
• The data collected were academic information on 316 students.
• The response variable is days absent during the school year (daysabs), from which we
explore its relationship with math standardized tests score (mathnce), language
standardized tests score (langnce) and gender (female).
• As assumed for a Poisson model our response variable is a count variable, and each
subject has the same length of observation time.
• Also, the Poisson model, as compared to other count models (i.e., negative binomial or
zero-inflated models), is assumed the appropriate model.
• In other words, we assume that the dependent variable is not over-dispersed and does
not have an excessive number of zeros.
• Also, note that each subject in our sample was followed for one school year.
• If this was not the case (i.e., some subjects were followed for half a year, some for a
year and the rest for two years) and we were to neglect the exposure time, our Poisson
regression estimate would be biased, since our model assumes all subjects had the
same follow up time.
• If this was an issue, we would use the exposure option, exposure(varname), where
varname corresponds to the length of time an individual was followed to adjust the
Poisson regression estimates.
• Iteration Log – This is a listing of the log likelihood at each iteration.
• Poisson regression uses maximum likelihood estimation, which is an iterative
procedure to obtain parameter estimates. This iteration log behaves differently.
• Specifically, the log likelihood at iteration 0 does not correspond to the likelihood for
the empty (or null) model.
• This is evident when we look under ll(null) from the estat ic command, which provides
the log likelihood for the empty model.
• The log likelihood for the fitted model is given in the last iteration of the iteration log
and under ll(model) from estat ic; note that both values are equal (unlike ll(null) and
the log likelihood from iteration 0).
• The log likelihood for the fitted model is then used with ll(null) to calculate the
Likelihood ratio chi-square test statistic.
• Log Likelihood – This is the log likelihood of the fitted model.
• It is used in the calculation of the Likelihood Ratio (LR) chi-square test of whether all
predictor variables’ regression coefficients are simultaneously zero and in tests of
nested models.
• c. Number of obs – This is the number of observations used in the Poisson regression.
It may be less than the number of cases in the dataset if there are missing values for
some variables in the model.
• By default, Stata does a listwise deletion of incomplete cases.
• LR chi2(3), ll(null) and ll(model) from estat ic – This is the LR test statistic for the
omnibus test that at least one predictor variable regression coefficient is not equal to
zero in the model.
• The degrees of freedom (the number in parenthesis) of the LR test statistic is defined
by the number of predictor variables (3). LR chi2(3) is calculated as -2*[ll(null) –
ll(model)] = -2*[-1635.608 – (-1547.971)] = 175.274.
• e. Prob > chi2 –This is the probability of obtaining this chi-square test statistic
(175.274) if there is in fact no effect of the predictor variables.
• This p-value is compared to a specified alpha level, our willingness to accept a Type I
error, which is typically set at 0.05 or 0.01. The small p-value from the LR test, p <
0.00001, conclude that at least one of the regression coefficients in the model is not
equal to zero.
• Pseudo R2 – This is McFadden’s pseudo R-squared. It is calculated as 1 –
ll(model)/ll(null) = 0.0536.
• Poisson regression does not have an equivalent to the R-squared found in OLS
regression.
• daysabs – This is the response variable in the Poisson regression.
• Recall that the dependent variable is a count variable, and Poisson regression models
the log of the expected count as a function of the predictor variables.
• mathnce –If a student were to increase her mathnce test score by one point, the
difference in the logs of expected counts would be expected to decrease by 0.0035
unit, while holding the other variables in the model constant.
• langnce –If a student were to increase her langnce test score by one point, the
difference in the logs of expected counts would be expected to decrease by 0.0122 unit
while holding the other variables in the model constant.
• female –The difference in the logs of expected counts is expected to be 0.4010 unit
higher for females compared to males, while holding the other variables constant in
the model.

• _cons – This is the Poisson regression estimate when all variables in the model are
evaluated at zero.

• For males (the variable female evaluated at zero) with zero mathnce and langnce test
scores, the log of the expected count for daysabs is 2.2867 units.

• z and P>|z| – These are the test statistic and p-value, respectively, that the null
hypothesis that an individual predictor’s regression coefficient is zero given that the
rest of the predictors are in the model. The test statistic z is the ratio of the Coef. to the
Std. Err. of the respective predictor.
• The z value follows a standard normal distribution which is used to test against a two-
sided alternative hypothesis that the Coef. is not equal to zero. The probability that a
particular z test statistic is as extreme as, or more so, than what has been observed
under the null hypothesis is defined by P>|z|.