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Multinomial Logit Model

Research methodology

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3 views

Multinomial Logit Model

Research methodology

Uploaded by

omotade29
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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3.4.3.

Multinomial Logit Model (MLM): this was used to assess


the effect of CBM and access to credit on the actor’s choice of
risk mitigation strategies in the study area. Multinomial logistic
regression is used to model categorical outcome variables, in
which the log odds of the outcomes are modeled as a linear
combination of the predictor variables. This is denoted as follows:

In the Multinomial logit model we assume that the log-odds of each


p
response follow a linear model; hij =log P =α j + x i β j … … … … .(i)
ik

ij

Where α j is a constant and β j is a vector of regression coefficients, for j


= 1, 2, , J-1. The probability distribution of the response is multinomial
instead of binomial and we have J-1 equations instead of one. The J-1
multinomial logit equations contrast each of categories 1, 2, J-1 with
category J.

Note that we need only J-1 equations to describe a variable with J


response categories and that it really makes no difference which
category we pick as the reference cell, because we can always convert
from one formulation to another.

Modeling Probabilities: Multinomial logit model can also be written


in terms of the original probabilities pij rather than the log-odds.
Adopting the convention that hij = 0, we can write
exp h
hij = ij
… … … … … … … … ….. (ii)
j k =1 exp hik

The J categories for this study will be (0, 1, 2, 3) where 0 is for the
choice of insurance cover, 1 for informal risk pooling and savings, 2 for
diversification/crop sharing and planting of resistant varieties and 3 for
borrowing from friends and relatives. The choice of insurance cover
serves as the reference group.

Where:
X1 = Gender of house head (1 = Male, 0 = otherwise)
X2 = Age of value chain actor (years)
X3 = Household Size
X4 = Primary Occupation of Household Head (1 =Agric-related, 0
= No)
X5 = Capacity of Enterprise
X6= Primary income ((₦ /production cycle)
X7 = Access to credit facilities (1 =Yes, 0 = No)
X8 = Membership of Cooperative society (1 =Yes, 0 = No)
X9 = Access to extension services (1 =Yes, 0 = No)

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