ASSIGNMENT 3

Discriminant Analysis 2

Submitted by
Avinash K V N B
1627718

M2

To
Prof. Sreedhara Raman

1)
Classification Resultsa
low or high-risk Predicted Group
Total
customer Membership
high risk
low risk customer
customer
Original Count low risk customer 9 0 9
high risk customer 1 8 9
% low risk customer 100.0 .0 100.0
high risk customer 11.1 88.9 100.0
a. 94.4% of original grouped cases correctly classified.

Interpretation:
From the classification results, we can infer that the accuracy of the model is 94.4%. The
error in the model is due to classifying 1 low risk customer as high-risk customer.
2)
Wilks' Lambda
Test of Function(s) Wilks' Lambda Chi-square df Sig.
1 .319 16.573 3 .001

Interpretation:
Wilk’s lambda states the discriminating power of the model. Wilk’s lambda ranges between 0
to 1. If the wilk’s lambda value is closer to 0 then the dependent variables are able to classify
the customers correctly. If the wilk’s lambda value is closer to 1, then the discriminating
power in classifying the customers is very low.
Here wilk’s lambda value is .319 which is closer to 0. So the discriminating power in
classifying the customers is very high. The model is able to classify the customers as low risk
or high-risk customers.
Test for significance:
P value< 0.05 at 5% level of significance which states that the model is significant

3)
Standardized Canonical Discriminant Function Coefficients
Function
1
Age .924
Income .775
years_married .151

Interpretation:
From the standardized canonical discriminant function coefficients we can state the
contribution of every category
Age has the highest contribution following income whereas years married shows very low
contribution in classifying the customers as low risk or high risk customers
4)
Canonical Discriminant Function Coefficients
Function
1
Age .246
Income .000
years_married .085
(Constant) -10.003
Unstandardized coefficients

Interpretation:
Discriminant function is given by the equation in the form
Y= a+k1x1+k2x2+………..+knxn
The equation is,
Y= -10.003+0.246(age)+0.000008(income)+0.085(years married)
This is the required discriminant model. Here Y gives the discriminant score for any
applicant.

5)
Functions at Group Centroids
low or high risk customer Function
1
low risk customer 1.378
high risk customer -1.378
Unstandardized canonical discriminant functions evaluated at group means

Interpretation:
This states the customers whose score lies between -1.378 to 0 fall in the category of high
risk customers
The customers whose score is in between 0 to 1.378 fall in the category of low risk
customers.