WAGNER A.

KAMAKURA and MICHEL WEDEL *

The authors address the situation in which a researcher wants to cross-

tabulate two sets of discrete variables collected in independent samples,
but a subset of the variables is common to both samples. The authors
propose a statistical data-fusion model that allows for statistical tests of
association using multiple imputations. The authors illustrate this
approach with an application in which they compare the cross-tabulation
results from fused data with those obtained from complete data. Their
approach is also compared to the traditional hot-deck procedure.

Statistical Data Fusion for Cross-Tabulation

In this study, we address the following problem: A mar-
keting researcher conducts a survey and then must relate its
results to those obtained in a previous study conducted with
another independent sample. This problem is common in
marketing research and is found whenever a researcher
needs to consolidate results obtained from two independent
samples. This situation arises, for example, for market re-
search agencies that maintain consumer panels for consumer
nondurables. The panel data typically contain information
on brands purchased in a large variety of categories, as well
as prices, sales promotions, and so on. However, media ex-
posure of the respondents is in general not available, be-
cause the collection of such data imposes too great a burden
on the panel members and potentially biases buying behav-
ior. In addition, the costs of collecting single-source data on
both purchase behavior and media exposure often are pro-
hibitive. However, media exposure is available from sepa-
rate studies supplied by specialized research firms. Market
research agencies wanting to provide their clients with in-
sights into advertising effectiveness must cross-tabulate
product usage assessed in their panels with media exposure
as assessed by the media studies. This may be accomplished
by data fusion of purchase and media data, which has be-
come popular as a media planning tool, particularly in Eu-
rope (cf. Adamek 1994; Baker, Harris, and O'Brien 1989;
Buck 1989; Roberts 1994).
The problem of combining data from two different
sources has been solved by data-fusion procedures; in the
statistical literature this class of methods is also known as
*Wagner A. Kamakura is Thomas Marshall Chair in Marketing, Joseph
Katz Graduate School of Business, University of Pittsburgh. Michel Wedel
is Professor of Marketing Research, Faculty of Economics, University of
Groningen, Netherlands. The authors thank Professor Jose A. Mazzon for
providing the data for their illustration, Professor Ulf Bockenholt for his
valuable suggestion on the test on the adequacy of the data-fusion model,
Professor Tom Steerneman for his suggestion on the power calculations,
and the anonymous reviewers, whose comments have helped improve this
article.
file concatenation methods. Here, we propose a model-
based procedure for data fusion of discrete variables that ex-
tends previous work in this area. Previous work on file con-
catenation has been tailored predominantly to continuous
variables (cf. Rubin 1986). Although procedures for esti-
mating models for discrete variables when data are missing
have been provided by Little and Rubin (1987), the focus
has been on handling the problem of missing data.
Our procedure is based on a mixture model. The advan-
tage of the mixture model approach over previous heuristi-
cal data-fusion methods is that it forces the market re-
searcher to state assumptions that otherwise might not be
explicit in the data-fusion process, thus circumventing ad
hoc and subjective decisions. In addition, the mixture is a
parsimonious model specification that circumvents the cum-
bersome search for an appropriate specification of data-fu-
sion models. To assess the uncertainty associated with data
fusion, we use multiple imputations. Here, the missing ob-
servations are imputed more than once, which makes it pos-
sible to assess the degree of uncertainty about the missing
data. We show how cross-tables of any two partially ob-
served variables in the two data sets and tests of their asso-
ciation can be computed. We first review previous work in
this field and motivate and describe our data-fusion model
next. We then apply our approach to a customer satisfaction
study, assess its validity empirically, and compare it to com-
peting methods.
LITERATURE REVIEW
In the statistical literature, several authors have addressed
the file-concatenation problem. Reviews are provided by
Ford (1983), Rogers (1984), and Rubin (1986). Commonly
used methods for the concatenation of two files, A and B,
are hot-deck procedures. Hot-deck procedures duplicate da-
ta on the basis of some heuristic rule: When a value is miss-
ing from sample A (the recipient sample), a reported value
is taken from sample B (the donor sample) to replace it
(Ford 1983). Thus, each recipient subject is linked to one (or
more) donor subjects in file B on the basis of variables ob-

Journal of Marketing Research

485 Vol. XXXIV (November 1997), 485-498
486
served in both files. This is accomplished by matching sub-
jects on the basis of some measure of distance or similarity.
The common variables on which subjects are matched are
often demographics, but other variables may be included in
the files for the specific purpose of data fusion (Roberts
1994).
Different matching algorithms can be used to search for
the linkages of the subjects in the two files in hot-deck pro-
cedures. First, when quantitative (metric) common variables
are used, a distance function between subjects in the two
samples is defined. The subjects in file A are then matched
with subjects in sample B according to a minimum distance
function. Alternatively, model-based procedures for file con-
catenation may be used. These involve regression functions
estimated between the common variables and the unique
variables in sample A, which subsequently are used to pre-
dict the missing values of these variables in sample Band
vice versa (Rubin 1986). For example, Rubin and Thayer
(1978) provide an early application of regression-based
methods to calculate correlations among psychological test
items applied in nonoverlapping samples.
Second, if the variables are qualitative (discrete), the
common variables are grouped into categories, and an exact
match between subjects in the two files is sought along these
categories. For those subjects for whom an exact match does
not exist, the procedure searches for a match at a lower lev-
el of detail by omitting some variables or collapsing the cat-
egories of one or more variables. Often, a distinction is
made between critical variables, for which the match be-
tween the donor and recipient must be exact, and matching
variables, which are used to find the best possible match be-
tween donors and recipients within the classes defined by
the critical variables. The hot-deck procedures that are based
on discrete variables often involve complicated classifica-
tion processes, in which the sample units are classified into
disjoint, homogeneous imputation groups. Observations in
these imputation groups are considered exchangeable, and
missing values in the recipient sample can therefore be im-
puted from subjects in the same imputation group in the
donor sample (for applications to purchase and media data
fusion, see Antoine and Santini 1987; Baker, Harris, and
O'Brien 1994; Buck 1989; O'Brien 1991; Roberts 1994).
A major disadvantage of hot-deck procedures is their
heuristic nature. Hot-deck methods require several subjec-
tive decisions that critically affect the quality of the complete
data set obtained. The choice of the distance and matching
measures, the definition of the levels of the matching proce-
dure in terms of categories and variables, and the distinction
between critical and matching variables are some examples.
Moreover, the statistical properties of the fused data set are
unknown, and consequently, the significance levels of chi-
square tests from cross-tables calculated from the fused data
are invalid. Current hot-deck procedures use a single imput-
ed value and therefore theoretically have poor sampling
properties (Li, Raghunathan, and Rubin 1991), even though
they could be extended for multiple imputations.
Model-based file concatenation methods overcome sever-
al of these problems. Rubin (1986) proposed regression-
based procedures for file concatenation on the basis of con-
tinuous data. However, this method does not apply to dis-
crete data. Little and Rubin (1987) propose log-linear mod-
els for partially classified contingency tables. These proce-
JOURNAL OF MARKETING RESEARCH, NOVEMBER 1997
dures apply to discrete variables with missing data, but they
were not developed in the context of data fusion and may
pose problems of model selection when applied to the large
data-fusion problems in marketing research. In addition,
when calculating association tests, the uncertainty that aris-
es from the imputation of missing data should be taken into
account. Meng and Rubin (1992) propose test statistics for
testing associations among variables when part of the obser-
vations are missing, which takes into account the uncertain-
ty due to imputation. Our approach builds on this stream of
research.
We develop a procedure specifically tailored to discrete
data and the problem of forming cross-classified tables with
chi-square tests of significance among variables from inde-
pendent studies obtained from separate samples, a problem
commonly found in marketing research. Rather than con-
catenate two independent files by matching them on the ba-
sis of the information on the common variables only, we
propose a mixture model that identifies homogeneous impu-
tation groups on the basis of all information available from
the two samples. This proposed approach ties in with the
practice in marketing research of using imputation groups
for data fusion. Whereas in the hot-deck procedure these im-
putation groups are usually delineated a priori on the basis
of arbitrary criteria, our proposed mixture model identifies
them post hoc on the basis of the statistical analyses of the
common and unique data for the data sets to be fused. In ad-
dition, our procedure circumvents problems of model selec-
tion encountered in some existing approaches to modeling
under missing data applied to data-fusion problems in mar-
keting. We use multiple imputations to provide an assess-
ment of the uncertainty caused by the data-fusion process.
This study extends the earlier work by Rubin and colleagues
on file concatenation and multiple imputation to discrete da-
ta and involves a new mixture model that deals with partial-
Iy observed data. We apply a significance test, originally de-
veloped for missing data problems, to the file-concatenation
problem. Furthermore, we provide insight into the perfor-
mance of data fusion relative to complete data, both in an
absolute sense and relative to traditional hot-deck methods.
DEVELOPMENT OF THE DATA-FUSION MODEL
We introduce the basic notation required for our ap-
proach. Measures are obtained from two samples denoted by
A and B on sets of categorical variables. Let
i = I,..., N indicate subjects in sample A,
i = N + 1,..., N + M indicate subjects in sample B,
j = 1,..., P indicate variables unique to sample A,
j = P + 1,..., P + Q indicate variables common to samples
A and B,
j = P + Q + 1,..., P + Q + R indicate variables unique to
sample B,
kj = I, , Kj indicate categories of variable j,
t = I, , T denote homogeneous imputation groups, and
s = 1, , S denote multiple imputations.
The purpose is to fuse the samples A and B to enable the
investigation of bivariate relationships of the discrete vari-
ables measured in those two samples. These discrete vari-
ables are denoted by Xijb where Xijk = I if the observed val-
ue of variable j for subject i falls in category k of the Kj cat-
egories of this variable, and Xijk = 0 otherwise. A complete
Statistical Data Fusion
Figure 1
SCHEMATIC REPRESENTATION OF THE DATA-FUSION
PROBLEM
(N + M) by (P + Q + R) data matrix X is formed, in which
part of the observations are missing. Missing data are indi-
cated by Xm, observed data are denoted by XO.
In terms of the example given in the introductory section,
the variables common to sample A and B can be demo-
graphics, whereas the variables unique to sample A or sam-
ple B can be choice behavior toward a set of brands and me-
dia exposure, respectively. To simplify the presentation, we
assume no additional missing data among the variables in
sample A or sample B. We also assume that there are no sub-
jects for whom all variables are assessed.' The sample de-
sign underlying both samples is assumed to be a simple ran-
dom sample. As a consequence of these assumptions, sam-
ples A and B can be considered repeated independent sam-
ples from the same population, which enables us to form the
complete data matrix X displayed in Figure I.
It is useful to note from Figure I that the missing obser-
vations have a special structure, which distinguishes the da-
ta-fusion problem from the typical imputation of missing
data. The advantage of formulating the data-fusion problem
as a missing-data problem is that the corresponding missing-
data problem has attractive properties that facilitate the sta-
tistical treatment. In particular, the missing-data generation
mechanism is not stochastic as in many other missing-data
problems but deterministic, because it is induced by the
study designs of the two samples. Therefore, this particular
missing-data mechanism is ignorable (Rubin 1976). A miss-
ing-data mechanism is said to be ignorable if (I) the miss-
ing-data generation mechanism is not relevant for inference
'We note that in situations in which all variables are measured for some
subjects, the performance of our (and other model-based) data-fusion pro-
cedures improves, because then information on the partial association of the
two sets of unique variables in samples A and B, given the common vari-
ables, is available.
487
on parameters describing the complete data and (2) the
mechanism generating the missing data depends only on the
observed data and not on the missing data.
Data fusion depends on the relationship between the
missing and nonmissing observations, which can be de-
scribed by a model. Little and Rubin (1987) propose the use
of log-linear models when the missing data mechanism can
be ignored. They show that the likelihood can be factored on
the basis of the marginal tables for which complete infor-
mation on all cells is available. In our particular problem
(i.e., data fusion), we intend to cross-classify two discrete
variables, one in Set I, Xj (j $; P), and one in Set III, JS' (j' >
P + Q). Little and Rubin's approach can be applied by com-
puting the marginal tables from sample A, classified by the
variables in Set I and the common Set II, and the table com-
puted from sample B, classified by the variables in Set III
and the common Set II. The likelihood estimates for the pa-
rameters of a log-linear model describing the relation be-
tween Xj and Xj' can be obtained by using the factorization
of the joint probability into product of the probabilities for
these two marginal tables. This log-linear model requires
many parameters to be estimated in applications of data fu-
sion in marketing and is to be estimated for all possible com-
binations of two variables in the unique Sets I and III. For
example, in the illustration we provide subsequently, this
model would be impractical, requiring the fitting of two 16-
dimensional tables, with more than 100,000 cells each, for
80 pairs of variables.
Instead, we assume the existence of a limited set of unob-
served imputation groups to describe the dependencies in
the tables. This circumvents the need to estimate a high-di-
mensional table for each cross-classification of two vari-
ables. The model is estimated for all variables simultane-
ously, which thus eliminates the need to estimate and select
a model for each pair of variables (from the unique Sets I
and III) to be cross-tabulated.
The mixture model presents a particularly attractive alter-
native over the traditional hot-deck classification proce-
dures. Using the latter methods, imputation groups of ex-
changeable observations are typically derived using some a
priori procedure, which involves several subjective deci-
sions on the part of the researcher. On the contrary, our mod-
el enables the identification of imputation groups post hoc
from the available data. Our mixture model presents a sta-
tistical approach to the derivation of imputation groups,
which has the advantage that measurement error in the vari-
ables is accounted for, and the statistical framework causes
subjective decisions in various stages of the data-fusion
process to be largely circumvented. Mixture models are by
now established tools in marketing research (cf. Dillon and
Kumar 1994; Wedel and DeSarbo 1994), and several studies
have shown their ability to identify homogeneous latent
groups in data (e.g., DeSarbo and Cron 1988; Wedel and De-
Sarbo 1995).
We assume that T homogeneous imputation groups un-
derlie the data on the three sets of variables (where the num-
ber of groups T is not known in advance) and have prior
probabilities 11t:
L
T
(1) r. (X 10) - lldi I t (Xi! 0 1) ,
1=1
488
where Q = {TIt, at; t = 1, 2,..., T} contains all the relevant pa-
rameters, and Xi denotes the ith row of X. For the purposes
of data imputation, the mixture model, by assumption, has
the attractive property that the observed sets of variables are
locally independent within imputation groups. Assuming
that the observed and missing sets of variables are locally in-
dependent within imputation group t, we can write the joint
distribution of the missing and nonmissing observations as
the product of their marginal distributions:
(2) filt (X?,XFI9 t) = Llt(X?19t)filt(XFI9t)·
We assume that the j = 1,..., P + Q + R variables are multin-
omial with Kj categories (Kj ~ 2) and are described by the
multinomial probability density with response probabilities
aj kt for category k of variable j in group t:
(3)
Here, Xij may denote both the nonmissing and missing ob-
servations. In estimating the model, the researcher identifies
the imputation groups in such a way that all observed vari-
ables are locally independent within the groups. This means,
for example, that within the imputation groups in sample A,
the P unique variables are approximately independent from
the Q common variables. Moreover, the P and Q variables
are approximately independent among themselves within
each imputation group. Therefore, the procedure identifies
the imputation groups not only by using the information
about the association among the Q common variables, but
also by capitalizing on the dependence among the P unique
variables and their joint association with the Q common
variables. The intuition behind the application of the mix-
ture model is to obtain groups of observations that are ex-
changeable. This implies that if some of the observations
within a certain group of subjects are missing (for example
the R unique variables for subjects from sample A), they can
be replaced by values that are obtained from the model esti-
mates that are obtained from subjects from another sample
B belonging to that same latent imputation group. This idea
is analogous to the one underlying the identification of ho-
mogeneous imputation groups in hot-deck procedures.
However, here we attempt to identify the homogeneous
groups that are based on statistical estimation, rather than on
heuristic rules.
Model Estimation
The parameters of the model are estimated by maximiz-
ing the likelihood function. The log-likelihood can be writ-
ten as
t. I{t.", D
(4) liUI XO) " I", ,(XF 10,)]
1"[t.", 'XC
,oN.' 1;;I«XFlo,l]
This likelihood is composed of two terms, one for sample A
and one for sample B, in which the mixture prior probabili-
JOURNAL OF MARKETING RESEARCH, NOVEMBER 1997
ties as well as the response probabilities for the common
variables are restricted to be the same. Note that Equation 4
does not involve the missing observations, and therefore the
imputation procedure described subsequently is nonitera-
tive. The previous log-likelihood will be maximized using
an iterative EM algorithm (Dempster, Laird, and Rubin
1977).
In the EM algorithm, the E- and M-steps are alternated
until the improvement in the likelihood function is below a
user-specified threshold. We do not provide the derivation of
the EM algorithm for this problem because it is straightfor-
ward and available elsewhere (Dempster, Laird, and Rubin
1977), but its steps are summarized in the Appendix. The ex-
pressions for the parameter estimates have closed form, and
therefore the implementation of the EM algorithm is com-
putationally attractive, even for the large samples encoun-
tered in data-fusion problems. The EM algorithm suffers
from convergence to local optima, and therefore we use sev-
eral sets of random starting values of the posterior probabil-
ities. The model comprises three sets of parameters: the two
sets of mixture model parameters for the unique sets of vari-
ables in the first and second samples respectively, and the
mixture model parameters for the common variables across
the two samples. Identification of each of these three sets of
parameters follows from standard identification proofs for
mixtures of exponential family distributions (Titterington,
Smith, and Makov 1985). Under standard regularity condi-
tions, the parameter estimates are asymptotically normal,
with covariance matrix Ln, which is estimated by inverting
the negative Hessian matrix of second derivatives. When es-
timates of the model parameters are obtained, estimates of
the posterior probabilities, 1tit, that subject i belongs to im-
putation group t can be calculated using Bayes' Theorem
(see the Appendix).
The selection of a parsimonious number of imputation
groups, T, is of concern in the application of mixture mod-
els to data-fusion problems, because the quality of the data
fusion will not increase indefinitely with increasing T. The
quality of the data fusion is dependent on the precision with
which the mixture model parameters are estimated because
these form the bases for imputation. On the one hand, as the
number of imputation groups decreases, heterogeneity with-
in the groups increases, and the model estimates become in-
creasingly burdened with aggregation bias. On the other
hand, as T increases, the number of observations in each im-
putation group decreases, which negatively affects the pre-
cision of the estimates, thus inflating their estimated vari-
ances. Therefore, it is likely that there is an optimal value of
T. Unfortunately, the standard Likelihood-Ratio (LR) test
statistic for testing T versus T + 1 groups is invalid because
the T group solution is at the boundary of the parameter
space of the T + 1 group solution (Aitkin and Rubin 1985),
so this statistic cannot be used to determine the optimal
number of imputation groups (or segments) T. In line with
the current practice in the mixture model literature, we use
the Consistent Akaike Information Criterion (CAlC, Bozdo-
gan 1987) as a heuristic, in which that number of groups, T,
is selected for which the CAlC reaches a minimum. In addi-
tion, it is important to ensure that the imputation groups are
well separated. We use an entropy statistic ET to investigate
the degree of separation in the estimated posterior probabil-
ities (cf. DeSarbo et al. 1992). ET is a relative measure and
Statistical Data Fusion
is bounded between 0 and 1, where values close to 1 indicate
that the posteriors are well separated. A value close to 0 is of
concern because it implies that the posteriors are not suffi-
ciently separated.
Multiple Imputation of the Missing Data
When the parameters of the model are estimated, the data-
fusion process involves the imputation of the missing obser-
vations in X. There are important problems in imputing a sin-
gle "best" value for one missing value. A single imputed val-
ue cannot represent the uncertainty involved in the imputa-
tion process and therefore leads to underestimation of uncer-
tainty in subsequent analyses of the imputed data set. Sever-
al studies have shown that these effects can be serious and
that multiple imputation is preferred over single imputation
with regard to the estimates of confidence intervals and sig-
nificance levels. In our application this is important because
we want to assess the significance level of the association of
pairs of discrete variables. Multiple imputation replaces each
missing observation with S (~ 2) values. From a Bayesian
perspective, the data-imputation procedure involves drawing
S sets of values from the posterior density of the missing da-
ta, Xim, which is obtained by integrating the density of Xim
with respect to the distribution of the parameters:
(5) fj (Xl" I X?) = J r, (Xl" IX?,Q)f(QI XO)dQ,
where 0= [(j),~] are the parameters of the latent class model.
The purpose here is to cross-classify two discrete vari-
ables from the sets {Xj; j = 1,..., P} and (X/; j' = P + Q +
I, ..., P + Q + R), which results in a Kj by Kj' contingency
table. This is equivalent to estimating the joint (posterior)
probability distribution of Xj and Xj" which is characterized
by the parameters representing the cell probabilities: <P =
(<Pkl; k = 1,..., Kj, 1 = I, ..., Kj')' (For convenience of notation
we omit the subscripts for the variables j and j' on the cate-
gory indicators k and 1.) The posterior density is computed
by calculating the conditional posterior density given the ob-
served and missing data and integrating out the distribution
of the missing data from that expression:
IT
N+M
(6) f(fIXO) = Jf(f I XO,Xffi) [C (XjffiIXjO)]d x-.
i =I
In using Equations 5 and 6 for imputation, the researcher
substitutes Equations I and 2 and approximates the integrals
by sampling from the respective distributions. The imputa-
tion procedure operates as follows: For a particular subject,
first draw values of the parameters, Q*, from the posterior
distribution fi(Q I XjO), which is asymptotically MY-Normal
with covariance matrix LQ.2 The drawn parameter values for
the common variables enable the calculation of posterior
probabilities that the subject belongs to imputation group t
for all t: 1tjt* . Then draw the imputation group t" from a
multinomial distribution with probabilities 1tit* . Finally,
draw Xm* conditional upon the values of the parameters Q*
2From a Bayesian perspective, the covariance matrix of the maximum
likelihood estimates obtained by inverting the Hessian provides an approx-
imation to the posterior distribution of the parameters in large samples.
Because the sample sizes in data fusion are large, this approximation is
fairly accurate in practice.
489
and the imputation group t* from f i I t* (Xjm I XiO). This in-
volves drawing from a multinomial distribution with proba-
bilities 8 jkt . This is repeated S times, and the posterior den-
sity of the parameters <P is approximated by computing <p*'
for each of the S repeated samples. The imputation proce-
dure itself is noniterative, which offers obvious computa-
tional advantages. It can be summarized as follows:
I. Initialize s = I;
2. Initialize i = I;
3. Sample the parameters Q* from MVN(Q,Ln);
4. Calculate the posteriors 1tit";
5. Sample the imputation group t" from 1tit";
6. Sample Xjffi* from fj I t* (Xjffi I X,D);
7. i = i + I, repeat steps 3 through 6 if i :<:; N;
8. s = s + 1, repeat steps 2 through 7 if s :<:; S.
Thus, the S imputed data sets are analyzed, and the results
are combined. For moderate fractions of missing informa-
tion, a relatively small number (e.g., S = 3) of draws suf-
fices. However, data-fusion problems present a class of file-
concatenation problems with particularly high fractions of
missing information. The average ratios of missing to com-
plete information are as high as 'Y = 1.5 or 'Y = 2 (corre-
sponding to fractions of missing information in the range of
1/3 to 1/2). Imputation methods with modest numbers of im-
putations that work well under common missing value prob-
lems (i.e., 3 ::; S ::; 5) are not suited to deal with these cases
and may have poor sampling properties (Li, Raghunathan,
and Rubin 1991). Because the fraction of missing informa-
tion in data-fusion problems is large, a large number of im-
putations (e.g., S = 100) must be used.
Testing for Association in the Fused Table
Our multiple imputation procedure produces one cross-
tabulation with cell proportions <Ps = {<Plls,"" <PKjKj's}, for
each of the S imputations. The final estimates of the cell
proportions in the cross-table are obtained by averaging the
S estimates for each imputation:
s
(7) ~ = t I..s:
s= I
To test for association between variables j and j' in the
fused table, we use the test statistic proposed by Meng and
Rubin (1992) in the context of imputation of missing values
in surveys, which takes into account the uncertainty arising
from the imputation of missing data. This statistic D s, for
testing the independence assumption of the variables j and j'
after data fusion, is computed as
(8)
DB
where v = [S + I/H(S -l)](D w - DB) is the estimated odds
ratio of the fraction of missing information with respect to
the parameters <P and H (the number of degrees of freedom).
To compute the statistic D, it suffices to have access to the
LR test statistics for each of the S fused data sets and the es-
timates of the joint probabilities, <Ps, in each of these data
sets. DB is simply the LR test statistic calculated at the aver-
age of the S estimates of the joint probabilities, <Pkl' ~w is
the average of the LR statistics calculated at each estimate
<Pkls'
490 JOURNAL OF MARKETING RESEARCH, NOVEMBER 1997
Under the null-hypothesis the test statistic D follows an
approximate asymptotic FH,G-distribution, with the denomi-
nator degrees of freedom, G, calculated as
The test statistic Ds is appropriate under the assumption
that the fractions of missing information are approximately
constant across the parameters (i.e., Yi = Yfor that particular
table). Li, Raghunathan, and Rubin (1991) investigate the
sensitivity of Ds to this assumption by Monte Carlo simula-
tion and conclude that the test based on Ds asymptotically
has the correct level for S ~ 00.
EMPIRICAL ILLUSTRATION
We illustrate the proposed statistical data-fusion method
on data from a commercial customer satisfaction study. The
study pertains to the measurement of customer satisfaction
among the most valuable customers of a large multibranch
bank in Latin America. The study includes data collected in
a survey and from internal records. In the study, complete
data from both sources on all subjects are available. Howev-
er, problems of partial data in independent samples and the
need for data fusion may occur in similar studies (e.g., a sur-
vey that is conducted among a sample of customers, but in-
ternal records are available only for another sample; cases in
which it is not possible to identify the same subjects in the
survey and from the internal records). We use the data from
the present study because it enables us to simulate the situ-
ation in which incomplete data have been collected and to
compare the fused data to the actual complete data. Three
sets of variables (among many others) have been assessed in
the study:
(1) Eight survey measures assessing the staff (e.g., perceived
politeness, attentiveness, availability of clerks), which are
binary coded ("a little or not at all" versus "a lot"), one
measure of bank use, and one measure of overall satisfac-
tion (whether the respondent would recommend the bank to
friends) on a five-point scale ( from "certainly not" to "cer-
tainly yes");
(II) Fifteen variables on demographics (including gender, age,
and education) and the use of several of the bank's services
(e.g., savings, credit cards, insurances); and
(III) Eight performance variables available from internal
records, including number of transactions per month, con-
tribution of the account, funds in the bank, marginal contri-
bution of the account per dollars, and so on.
Observations on all variables are obtained for all 2000
subjects randomly sampled for our tests. We simulate a sit-
uation with two samples by randomly assigning the subjects
to two groups. We assume that the variables for the first
group have been collected by the survey among the bank
customers, in which only the variables in Sets I and II have
been assessed. For this group, the variables in Set III from
the internal records are assumed missing and are not used
for estimation. For the second group, we assume that the da-
ta are obtained from internal records, so that only variables
in Sets II and III are available. For this group, the satisfac-
tion measurements in Set I are assumed to be unknown and
are ignored in the estimation stage.
The main purpose of this treatment of the original data is
to enable the assessment of the data-fusion results. This en-
abies us to assess the validity of the proposed imputation
procedure. To this end, we compare the imputed cross-tables
from the incomplete data with the actual cross-tables from
the complete data. We then assess the correspondence be-
tween the association tests computed from the complete ta-
bles and those obtained from the imputed tables. The first
test shows how well the imputed data emulates the complete
data. The second test indicates whether the fused tables lead
to the same conclusions regarding the association between
the two discrete variables in each cross-tabulation.
Estimation Results
The first step in the analysis is to estimate the mixture im-
putation model. The model was applied to the data for T = I
to T = 7 imputation groups. In Table I, we provide the log-
likelihood, the CAlC statistic, and the p2 measure of ex-
plained variance (relative to the aggregate model) for these
solutions. To overcome problems of local optima, each of
the solutions reported is the best among 15 solutions ob-
tained from different random starting values of the posterior
membership probabilities. The CAlC statistic indicates that
the T = 5 solution provides the best representation of the da-
ta, and consequently, we use that solution as the basis of our
imputation procedure. In Table 2, we provide the parameter
estimates of the T = 5 solution. The imputation groups are
well separated; the entropy criterion calculated from the
posteriors equals .85.
It is clear that the proposed model is able to merge the two
incomplete data sets properly only if the five identified im-
putation groups represent homogeneous classes of subjects
in terms of their demographic profiles, survey responses,
and internal records, and if the association among those
variables across subjects is captured properly by the differ-
ences across these homogeneous groups. To verify this im-
portant assumption, the mixture model was applied to each
of the two data sets separately, restricting T = 5 for each da-
ta set. If the solution obtained from our mixture imputation
model properly captures the structure in both data sets, we
should expect it to fit well to the two data sets, relative to the
two models applied to each data set independently.
The goodness-of-fit results presented in Table 3 show a
lower CAlC for our model than for the combination of the
two independent models. In other words, after accounting
for the differences in sample size and number of parameters
being estimated, our mixture imputation model fits the two
data sets well relative to the two independent models. This
result leads us to the conclusion that the five imputation
groups identified by the model properly reflect the data
Table 1
LOG-LIKELIHOOD, CAlC, AND p2 FOR THE T = 1 TO T = 7
IMPUTATION MODELS
T Log-l CAlC p2
I -36484.63 73519.72 .1298
2 -33338.07 67871.01 .1850
3 -32500.19 66668.96 .1970
4 -31954.07 66135.77 .2038
5 -31589.97 65966.62* .2076
6 -31367.50 66080.76 .2087
7 -31121.15 66147.11 .2110
*Indicates the minimum value of CAlC.
Statistical Data Fusion 491

Table 2
PARAMETER ESTIMATES

Set I: Satisfaction Variables (Survey) Segment 2 3 4 5

Segment 2 3 4 5 10. Mutualfund usage
Use .168 .114 .011 .029 .126
I. Would recommend bank tofriends Don't .832 .886 .989 .971 .874
Certainly not .012 .051 .519 .072 .237 II. Tax-deferredfund usage
.005 .128 .202 .044 .253 Use .698 .589 .114 .341 .619
.131 .410 .203 .233 .347 Don't .302 .411 .886 .658 .381
Certainly yes .852 .411 .076 .651 .167 12. Commodities fund usage
2. Clerks are competent Use .449 .273 .042 .172 .390
A bit .005 .398 .829 .014 .964 Don't .551 .727 .958 .828 .610
A lot .995 .602 .171 .986 .036 13. Fixed ratefund usage
3. Clerks are attentive Use .237 .098 .008 .057 .169
A bit .016 .239 .832 .050 .969 Don't .763 .902 .992 .943 .831
A lot .984 .761 .168 .950 .031 14. Auto insurance usage
4. Clerks are polite Use .279 .222 .009 .022 .161
A bit .006 .091 .677 .046 .837 Don't .721 .778 .991 .978 .839
A lot .994 .909 .323 .954 .163 15. Home insurance usage
5. Clerks are fast, agile Use .204 .171 .007 .019 .118
A bit .072 .768 .976 .157 .987 Don't .796 .828 .993 .981 .882
A lot .928 .232 .024 .843 .013
6. Clerks answer questions Set Ill: Performance Variables in Quintiles (Internal Records)
A bit .013 .659 .881 .034 .958
A lot .987 .341 .119 .966 .042 Segment 2 3 4 5
7. Clerks are well informed
I. Number of transactions in respondent's account
A bit .056 .823 .938 .099 .988
1 bottom 20% .088 .013 .355 .504 .008
A lot .944 .177 .062 .901 .012
2 .227 .070 .298 .323 .164
8. Clerks are well groomed
3 .257 .303 .189 .101 .233
A bit .033 .307 .673 .022 .785
4 .199 .279 .100 .023 .262
A lot .967 .693 .327 .978 .215
5 top 20% .229 .334 .059 .048 .333
9. Clerks are available when needed
2. Contribution of respondent's account
A bit .038 .478 .928 .077 .967
I bottom 20% .000 .660 .112 .000 .162
A lot .962 .522 .072 .923 .033
2 .000 .259 .493 .000 .378
10. % offunds in this bank
3 .034 .053 .271 .154 .460
<25% .102 .174 .772 .357 .181
4 .492 .025 .088 .416 .000
25-50% .065 .162 .103 .163 .242 .037 .429
5 top 20% .475 .003 .000
50-75% .132 .111 .038 .158 .096 3. Respondent's funds in bank
75-100% .701 .553 .087 .322 .481 I bottom 20% .000 .340 .833 .000 .000
2 .000 .623 .167 .054 .073
Set II: Demographics and Status Variables (Common Variables) .027 .037 .000 .251 .634
3
Segment 2 3 4 5 4 .378 .000 .000 .337 .284
5 top 20% .595 .000 .000 .358 .009
I. Gender 4. Number of customers in respondent's branch
Male .195 .212 .355 .285 .209 I bottom 20% .127 .241 .174 .084 .174
Female .805 .788 .645 .715 .791 2 .294 .244 .225 .159 .225
2. Age 3 .170 .193 .098 .192 .176
<40 .149 .279 .355 .137 .278 4 .236 .165 .238 .329 .255
40-50 .303 .428 .390 .218 .372 5 top 20% .173 .157 .265 .236 .170
5Q-60 .289 .203 .150 .248 .246 5. Customers/employee in respondent's branch
>60 .259 .090 .105 .397 .104 I bottom 20% .184 .114 .151 .165 .198
3. Education 2 .193 .147 .076 .253 .140
Junior .085 .021 .088 .303 .041 3 .178 .194 .191 .225 .226
High .191 .189 .131 .139 .148 4 .306 .249 .376 .221 .213
College .724 .790 .781 .558 .811 5 top 20% .139 .297 .206 .135 .223
4. Savings usage 6. Customers/managers ratio in respondent's branch
Use .760 .685 .304 .650 .710 1 bottom 20% .187 .075 .189 .143 .195
Don't .240 .315 .696 .350 .290 2 .172 .218 .155 .220 .169
5. Credit card usage 3 .226 .232 .240 .198 .291
Use .368 .304 .080 .062 .252 4 .207 .213 .247 .247 .137
Don't .632 .696 .920 .938 .748 5 top 20% .207 .263 .169 .192 .208
6. Bank card usage 7. Volume of applications per transaction in respondent's account
Use .857 .902 .631 .618 .871 1 bottom 20% .000 .403 .758 .000 .000
Don't .143 .098 .369 .382 .129 2 .000 .597 .227 .005 .080
7. Certificate of deposit usage 3 .080 .000 .014 .149 .750
Use .687 .434 .058 .347 .498 4 .439 .000 .000 .280 .170
Don't .313 .566 .942 .653 .502 5 top 20% .480 .000 .000 .566 .000
8. Special checking usage 8. Marginal contribution (per $) of respondent's account
Use .936 .915 .447 .567 .897 1 bottom 20% .000 .689 .359 .000 .011
Don't .064 .085 .553 .433 .103 2 .048 .215 .100 .028 .688
9. Automatic bill payment usage 3 .434 .012 .010 .317 .157
Use .773 .695 .240 .437 .687 4 .437 .036 .025 .204 .144
Don't .227 .305 .760 .563 .313 5 top 20% .081 .047 .506 .451 .000
492 JOURNAL OF MARKETING RESEARCH, NOVEMBER 1997
Table 3
TESTING THE FIVE-GROUP SOLUTION
Log-
Model Likelihood
First sample (demo + perceptions) -13792.56
Second (demo + performance) -17687.60
First + Second Samples -31480.16
Proposed Model -31589.97
structure in both data sets. This conclusion was confirmed in
a direct comparison of the parameter estimates. The esti-
mates from the proposed model (Table 1) were close to
those obtained from the two independent data sets, with a
mean absolute deviation (MAD) of .032 across all response
probabilities for the demographic variables, a MAD = .009
for the response probabilities in the ten items from the sur-
vey, and a MAD = .028 for the eight performance variables
from internal records. This model comparison can be seen as
a test that indicates whether the imputation procedure will
work well. If the results from the two independent mixture
models differ substantially from the results of the mixture
imputation model, the imputation procedure is likely not to
produce good results in that particular application.
Although the actual interpretation of the imputation
groups is not of primary interest, we provide a brief de-
scription of the results in Table 2. Subjects in Group 1
(22.3%) have a positive opinion about the clerks, a high
probability of recommending the bank to friends, and a high
percentage of their funds in the bank. They are users of most
of the services of the bank, older, more often female, and
more educated. Consistent with their satisfaction scores,
they have high volume and contribution of transactions,
have a large percentage of funds in the bank, and are cus-
tomers of branches of the bank with low customer/employ-
ee ratios.
Subjects in Group 2 (21.8%) have a mixed opinion of the
clerks and score positive on some aspects and negative on
others. They have a moderate percentage of funds in the
bank and are moderately inclined to recommend the bank
to friends. They are younger, female, and users of many of
the bank's services. However, they provide a low contribu-
tion and volume, have a low percentage of funds in the
bank, and are customers of branches with high
customer/employee ratios.
Imputation Group 3 (15.7%) consists of dissatisfied con-
sumers. They have negative opinions about the clerks in
general, a low percentage of funds in the bank, and a low
probability of recommending the bank to friends. This group
contains more males than the other groups; members are rel-
atively young and use fewer of the bank's services. Consis-
tent with their opinions about the bank, the members of this
group have a low number and volume of transactions, a low
percentage of funds in the bank, and are customers of
branches with high customer/employee ratios.
Group 4 (19.8%) consists of older, less educated people,
and more of them are males compared with the other groups.
They have positive opinions about the clerks and would rec-
ommend the bank to friends. They only use specific services
of the bank (savings and bank cards). The number of their
transactions is low, but the volume and contribution of funds
is high.
Number of Sample
Parameters Size CAlC
164 1000 28718
254 1000 37130
418 2000 66138
324 2000 65643
Customers in Group 5 (20.4%) have negative opinions of
the clerks and would not recommend the bank to friends.
They are younger, more educated, and are moderate users of
the bank's services. Although they have a high number of
transactions, their contribution and volume of funds are low
to moderate. They are customers at branches with high cus-
tomer/employee ratios, which may cause their negative
opinions about the clerks.
Imputation Results
To assess the degree of fit between the tabulations of ac-
tual data and our imputed estimates, we processed all 80
possible pairs of the 10 survey variables and 8 internal mea-
sures and compared the imputed cell frequencies on these
tables with the actual frequencies. As was expected, the fit
between the cell frequencies from the "fused" tables and
those from the complete data is not perfect, because the im-
puted cell frequencies were obtained from incomplete data.
Nevertheless, the imputation procedure performs well and
produces cell-frequencies that are highly correlated (r = .97)
with those from the actual tables across all 960 cells of 80
two-way tables. In Figure 2, we show a scatterplot of the ac-
tual and imputed cell frequencies in which each observation
is labeled by the number of the column variable (from Set
III) in the cross-tabulation.
However, this association between actual and imputed
cell frequencies might overestimate the ability of the impu-
tations to reflect the true association among the variables be-
ing cross-tabulated. Part of this association could be due to
the model's ability to fit the row and column margins of the
cross-tables.I To partial out the row and column margins, we
transformed the actual and imputed cell frequencies into de-
viations from the expected frequencies under the hypothesis
of independence between rows and columns. After this
transformation, the correlation between actual and imputed
adjusted cell frequencies was reduced to r = .78.
The proposed data-fusion procedure can be assessed fur-
ther by comparing the results of the tests of association from
the imputed cross-tabulations with those obtained from the
actual (i.e., complete) ones. In Table 4, we summarize the
results of these tests across all 80 cross-tabulations at the .05
and .10 significance levels. We can see that these tests
agreed in 59 (74%) and 56 (70%) of the 80 tables at the .05
and .10 significance levels, respectively. Compared to the
complete tables, the significance tests in the imputed tables
were more likely (17 of 50 cases) to produce false negatives
(i.e., accepting independence when there was association in
the complete data) than false positives (4 of 30 cases). In
other words, the tests of association based on the fused ta-
3We thank an anonymous reviewer for pointing out this problem to us.
Statistical Data Fusion 493

Figure 2
COMPARISON OF ACTUAL AND IMPUTED FREQUENCIES (DEVIATIONS FROM INDEPENDENCE)

Proposed Model Hot Deck-Simple Matching

r = .78 r= .66

100 100
1 •

3
Ul 7 Ul
c: 50 c: 50
0 0
~ ~ 1
1
.~ .~
C 0 C
"0 "0
0
Ql Ql
:; :;
0. 0.
E -50
1
3
E -50

-100 -100
-100 -50 0 50 100 150 -100 -50 o 50 100 150
Actual Deviations Actual Deviations

Hot Deck-Age. Gender, and Education as Critical Hot Deck-Age and Gender Critical
r = .63 r = .63

100 100
1 •

1 2
Ul
c: 50 Ul
c: 50 •
0 , 0
1

'iii
'S
Ql
51
ii
.~ '~~ "
C
"0
0 C
"0
0 , ,
s::> $
::>
0. 0.
E -50 E -50

-100 ·100
-100 -50 0 50 100 150 -100 -50 0 50 100 150
Actual Deviations Actual Deviations

bles are more conservative than those based on the complete Table 4
data. This is expected because the fused tables are obtained SUMMARY OF TESTS OF ASSOCIATION FOR ALL
from incomplete data containing much less information on 80 CROSS-TABULATIONS
the association of the variables, which is expected to reduce
the power of the tests. On the basis of the empirical results Conclusions at 5% Significance Level
in Table 4, the relative power of the Meng and Rubin test
Imputed
compared with the LR test on the complete data is approxi- Total
mately 60-65% on average. Actual Association Independence Actual
We further illustrate the imputation procedure by focus- Association 33 17 50
ing on a selection of cross-classifications of the variables in Independence 4 26 30
Set 1 and Set III. The purpose is to show that the statistical Total Imputed 37 43 80
tests on the imputed and complete data correspond, and we
also infer the same substantive conclusions from the imput- Conclusions at /0% Significance Level
ed data as would be inferred from the original complete da- Imputed Total
ta. First, we cross-classify the satisfaction survey variables Actual Association Independence Actual
1-5 "Clerks are fast/agile" and 1-9 "Clerks are available
Association 33 21 54
when needed" from Set 1 with the variables III-I "Respon- 26
Independence 3 23
dent's number of transactions," III-3 "Respondent's funds in Total Imputed 36 44 80
the bank," III-4 "Number of customers in respondent's
branch," and III-5 "Ratio of customers per employees in re-
spondent's branch" from Set III. These cross-classifications survey, relates to clients' frequency and volume of service
would be requested by managers to provide insight into (1) use, obtained from internal records, and (2) whether certain
how the evaluation of the bank's clerks, obtained from the characteristics of a branch (number of customers and ratio
494 JOURNAL OF MARKETING RESEARCH, NOVEMBER 1997

of customers per employee) are related to customers' as-
sessments of its personnel.
Second, we cross-tabulate the survey variables (Set I) 1-10
"Would recommend the bank to friends" and I-I "Percent-
age of funds the customer states to have in this bank" with
the variables from the internal records (Set III) III-I "Re-
spondent's number of transactions," III-2 "Contribution of
the respondent's account," III-3 "Respondent's funds in the
bank," III-7 "Respondent's applications per transaction,"
and III-8 "Marginal contribution of the respondent's account
(per $)." It could be of interest to managers to relate overall
satisfaction measures from the survey to several specific
performance variables in this way.
In Table 5, we display the LR test statistic and the corre-
sponding p-value calculated from the actual cross-classifica-
tion, as well as the results from the test statistic D s and their
corresponding p-values calculated from the imputed data
(using 100 imputations). The table also shows 1'/(1 + 1'), the
estimated effective fraction of missing information for each
cross-table. Table 5 shows that the estimated fractions of ef-
fective missing information vary across the cross-tables but
are in all cases lower than .55. In four of the cross-tables, the
test statistic on the actual data does not reject the null-hy-
pothesis of independence at p < .05. The test statistic from
the imputed data agrees with these results, which leads us to
conclude that "Clerks are fast, agile" is not related to the
number of customers in the respondent's branch. "Clerks are
available when needed" is not associated with the respon-
dent's total number of transactions or with the number of
customers or ratio of customers per employee in the respon-
dent's main branch. However, both of these attitudes toward
clerks are associated with the respondent's funds in the
bank. Both tests on the actual and the imputed data support
these findings. The associations of "Clerks are fast,
agile" with the number of transactions and the customer/em-
ployee ratio are not supported by the more conservative tests
on the fused data.
On the basis of both the actual and fused tables, we con-
clude that the indirect measures of satisfaction (i.e., whether
the customer would recommend the bank to friends and the
percentage of funds the customer allocates to this bank) are
significantly associated with the customer's amount of funds
in the bank, the volume of applications per transaction, and
the marginal contribution of the account per unit of deposits.
The actual tables also lead to the conclusion that the indica-
tors of customer satisfaction also are related to the respon-
dent's number of transactions with the bank and with the to-
tal contribution of his or her account to the bank. However,
these last two conclusions are not supported by the more
conservative tests obtained from the incomplete data.
We inspect four of the cross-classification tables in detail
to reveal further strengths and weaknesses of the proposed
procedure. We show two cross-tables for which the tests on
the imputed data correspond to the tests on the actual data,
and two tables for which this is not the case. Table 6 depicts
the results of the cross-classifications of the survey variables
1-10 "Would recommend bank to friends" and I-I "% of
funds in the bank" with the internal record variable III-I
"Number of transactions." The estimates of the <l>kl are ob-
tained by averaging the S estimates for each imputation (see
Equation 7). Table 6 shows the estimates of the joint classi-
fication probabilities <l>kl, from the actual data and the imput-
ed data. These probabilities are expressed as percentages of
the grand total. Note from Table 5 that the association of 1-
10 and III-I (right-hand panel in Table 6) is significant for
both the actual and the imputed data, whereas the associa-
tion of 1-1 and III-1 (left-hand panel in Table 6) is significant
for the actual table but not for the imputed data. Apparently,
the variability across the 100 imputations in the latter case
causes the association not to be significant for the incom-
plete data. The left-hand panel of Table 6 shows that the cus-
tomers who would recommend the bank to friends execute
more transactions per month (i.e., are heavy users of the
bank). Although the results of the significance tests differ,
the percentages calculated from the imputed and actual data
are close. The right-hand panel of Table 6 shows a positive
association between having more funds in the bank and the
number of transactions per month, which is significant from
both the imputed and actual tables. The actual (in parenthe-
sis) and imputed percentages also are relatively close.
Table 7 shows the cross-classifications of the survey vari-
ables 1-5 "Clerks are fast/agile" and 1-9 "Clerks are available

Table 5
X2 TESTS ON THE ACTUAL DATA (LA) AND THE MENG-AUBIN TEST (Ds ) ON THE FUSED DATA

Set I (Survey) Set III (Internal Records) Df LR p-value yl( I+y) Ds p-value
Clerks are fast, agile Respondent's number of transactions 4 18.3 .00 .37 .08 .98
Clerks are fast, agile Respondent's funds in the bank 4 51.4 .00 .33 10.3 .00
Clerks are fast, agile Number of customers in respondent's branch 4 4.55 .34 .38 .46 .77
Clerks are fast, agile Customers/employee in respondent's branch 4 56.4 .00 .33 1.26 .30
Clerks are available when needed Respondent's number of transactions 4 7.89 .10 .39 .08 .99
Clerks are available when needed Respondent's funds in the bank 4 28.6 .00 .53 6.24 .00
Clerks are available when needed Number of customers in respondent's branch 4 1.79 .77 .39 .34 .85
Clerks are available when needed Customers/employee in respondent's branch 4 6.36 .17 .33 1.09 .36
Would recommend the bank Respondent's number of transactions 12 65.8 .00 .25 .75 .70
Would recommend the bank Contribution of respondent's account 12 105.6 .00 .19 2.97 .00
Would recommend the bank Respondent's funds in the bank 12 132.3 .00 .29 5.40 .00
Would recommend the bank Respondent's volume/transaction 12 110.4 .00 .24 5.21 .00
Would recommend the bank Respondent's unit contribution (per $) 12 34.3 .00 .21 2.40 .00
% of funds in the bank Respondent's number of transactions 12 165.8 .00 .12 3.64 .00
% of funds in the bank Contribution of respondent's account 12 113.9 .00 .17 1.38 .18
% of funds in the bank Respondent's funds in the bank 12 285.6 .00 .25 4.72 .00
% of funds in the bank Respondent's volume/transaction 12 274.8 .00 .18 4.31 .00
% of funds in the bank Respondent's unit contribution (per $) 12 115.3 .00 .12 3.39 .00
Statistical Data Fusion 495

Table 6
CELL PERCENTAGES OF IMPUTED AND ACTUAL (IN PARENTHESIS) TABLES CROSSING COLUMN VARIABLES WITH "NUMBER OF
TRANSACTIONS" (111-1, IN QUINTILES)

I-I. "Recommend bank to friends" 1-10. "% offunds in bank"

Ill-I I.No 2 3 4. Yes 0-25 25-50 50-75 75-100
I bottom 20% 3.8 2.1 4.5 7.6 7.6 2.5 1.9 6.2
(4.0) (2.1) (4.7) (7.8) (9.1) (3.6) ( 1.9) (4.4)
2 3.5 2.5 5.5 9.4 6.8 3.1 2.3 8.9
(3.6) (3.2) (4.0) (9.2) (6.8) (2.9) (2.8) (7.7)
3 3.3 2.7 6.0 9.9 5.8 3.2 2.4 10.5
(3.1) (3.7) (6.5) (8.7) (4.8) (3.3) (2.6) (ll.l )
4 2.4 2.1 4.8 8.2 4.3 2.7 2.0 9.0
(2.2) (2.8) (4.7) (8.4) (4.6) (2.3) (1.7) (9.9)
5 top 20% 2.7 2.5 5.8 9.8 4.5 3.1 2.3 10.8
( 1.9) ( 1.6) (4.8) (12.4) (3.3) (2.2) (2.2) (13.0)

Table 7
CELL PERCENTAGES OF IMPUTED AND ACTUAL (IN PARENTHESIS) TABLES CROSSING SATISFACTION VARIABLES WITH
"CUSTOMER/EMPLOYEE RATIO IN RESPONDENTS BRANCH" (111-5, IN QUINTILES)

1-5. "Clerks are fast " 1-9 "Clerks are available"

1ll-5 A bit A lot A bit A lot
1 bottom 20% 9.9 (9.3) 7.8 (7.1) 7.6 (7.1) 8.7 (9.6)
2 9.3 (7.4) 8.6 (9.3) 6.9 (5.2) 9.7 (11.6)
3 12.4 (10.9) 9.5(11.1) 9.4 (8.5) 11.0 (13.6)
4 17.6 (15.8) 11.5 (8.6) 13.3 (13.5) 13.4 (10.8)
5 Top 20% 13.2 (14.0) 8.5 (6.4) 10.0 (11.0) 10.0 (9.2)

when needed" with the "Ratio of customers to employees"
from the internal records (III-5). From Table 5, it can be
seen that the association of 1-5 and III-5 is significant for the
actual but not for the imputed tables. The association of 1-9
and III-5 is not significant for either actual or imputed ta-
bles. The left-hand panel of Table 7 reveals intuitive results:
When the ratio of customers to employees increases, the
percentage of customers who rate clerks as "fast and agile"
decreases for both the imputed and the actual data. The per-
centages calculated from the imputed and actual data in the
left-hand panel of Table 7 are relatively close. Although the
average imputed cell counts show some association between
the two variables, the high variance observed across all 100
imputations leads to an inconclusive test for this association.
The right-hand panel of Table 7 shows that the imputed and
actual percentages in the cross-table of "Clerks are avail-
able" and customer/employee ratio are close and that there
is no association between these two variables, which was
confirmed by the tests on both the actual and imputed tables.
Sensitivity, Model Comparisons, and Statistical Power
We investigate the sensitivity of the proposed data-fusion
method to the number of imputation groups and compare it
to the traditional hot-deck approach. We address the issue of
the number of imputation groups. As noted previously, the
quality of the data fusion does not necessarily increase with
the number of imputation groups; a too-large number of im-
putation groups, might capitalize on chance and lead to un-
stable and extreme estimates of response probabilities with-
in classes (so called boundary effects), whereas a too-small
number of groups might fail to capture the true differences
in response across individuals. We used the CAlC statistic to
select the proper number of imputation groups. However,
this is only a heuristic procedure, because the asymptotic
properties of likelihood-based tests, including CAlC, do not
hold when testing for T versus T + I classes. Therefore, we
further investigated the sensitivity of the procedure to the
number of imputation groups. For that purpose, we applied
our imputation procedure to the same empirical data, with T
= 4, T = 5, and T = 6 imputation groups. The imputed cell
frequencies fit fairly well to the actual tables, with correla-
tions of .96, .97, and .96 for 4, 5, and 6 groups, respective-
ly. After transformation into deviations from the indepen-
dence hypothesis, the correlations were .75, .78, and .72, re-
spectively. The LR (from the complete tables) and D-tests
(from the imputed tables) agree in 59, 59, and 52 of all 80
tables (at a 5% significance level), respectively. These re-
sults show that the T = 5 solution indeed presents the opti-
mal value in this application.
We also compared our data-fusion method to several im-
plementations of the hot-deck approach. Although the
choice of the critical matching variables is somewhat arbi-
trary, gender and age are used as such in virtually all pub-
lished applications of the hot-deck procedure. For that rea-
son they also were used as critical matching variables in this
study. Donor subjects in sample B were matched to the re-
cipients in sample A to replace their missing observations,
and vice versa. Matches were found for subjects who be-
longed to the same age and gender groups and for whom the
number of equal responses was the highest across the vari-
496
abies in the common Set II. The same donor was allowed to
match with multiple recipients. We first implemented the
hot-deck procedure using all variables in the common Set II
as matching variables. This criterion produced a correlation
of .66 between actual and imputed cell deviations (from ex-
pected frequencies under independence) across all 980 cells
in the 80 cross-tabulations. When age was added as a criti-
cal matching variable, the correlation obtained was still .66.
When gender and age were used as critical matching vari-
ables (along with the remaining variables in the common Set
II as matching variables), the correlation was slightly lower,
r = .63. The same correlation was obtained when education
was added to gender and age as critical matching variables.
All results from the hot-deck implementations were lower
than the correlation of .78 obtained with our (T = 5) model-
based approach.
In Figure 2, we present the scatterplots of the actual and
imputed frequencies, calculated as deviations from indepen-
dence, for the proposed model and the three hot-deck proce-
dures. These scatterplots underline the superior performance
of the proposed model. Note that the correlations are some-
what inflated because of the presence of two extreme obser-
vations (column variables 3, funds in the bank, and 7, vol-
ume per transaction), and because the relative performance
of our model over the hot-deck procedure increases even
further if these observations are deleted. These results sup-
port the proposed mixture procedure over the hot-deck
method.
From our empirical application, it appears that the tests on
the data with missing observations are more conservative
than the tests on the original data. This is caused by the fact
that a good fraction of the information is missing. The re-
duction in power can be observed from Equation 8. If the
fraction of missing information, y, is known, the test statis-
tic Ds = DBIH(1 + y) - X2HIH. This in addition approxi-
mately holds as S ~ 00; that is, HD~ - X2H . Consequently,
in our application we can approximate the test statistic D, by
a chi-square distribution on H degrees of freedom, because
we use a large number of imputations. Because the average
of the S imputed estimates converges to the complete data
estimate according to the strong law of large numbers, (j) ~
<Pc (Li, Raghunathan, and Rubin 1991), DB converges to the
complete-data LR statistic. An indication of the effect of in-
creasing fractions of missing information on the power of
the test can be evaluated as follows: The power of the com-
plete-data LR test statistic is P,..{X 2H(A.) ~ cal, with X2H(A.) a
noncentral chi-square distribution with noncentrality para-
meter A., and ca the critical value of the chi-square distribu-
tion with size o; The power of the Meng-Rubin test statistic
is approximately P;dX2H(A.) ~ (1 + y)ca}. This expression
shows the effect of the fraction of missing information. To
assess the effect of missing information, we evaluate the
power of the Meng-Rubin test as a function of A. for two val-
ues of H (H = 4 and H = 12) consistent with the degrees of
freedom in our empirical application and several values of y
in the range .0 - .5. Figure 3 shows the results and enables
us to evaluate the power as a function of the fraction of miss-
ing information. For example, if H = 4, A. = 12, and y = .2,
the power loss relative to the complete data, defined as ~ =
(P, - P)/Pc, is 20%. If H = 12, A. = 30, and y = .3, the rela-
tive power loss is ~ = 31%. Figure 3 shows that the loss in
power is modest for small fractions of missing information,
JOURNAL OF MARKETING RESEARCH, NOVEMBER 1997
Figure 3
POWER PLOTS
Power of the Meng-Rubin Test With Missing Data
(4 degrees offreedom)
.8
fraction ot missing information
~ .6
~
&: .4
.2
o 4 8 12162024283236 4044485256606468727680848892 96
Lambda
Power of the Meng-Rubin Test With Missing Data
(12 degrees offreedom)
.8
.5 fraction of missing
.6 information
~ .4
1l
e
a.
.2
o 4 8 12 1620 2428 323640 4448525660 64687276 80 8488 9296
Lambda
in the range .0-.3, but increases disproportionately and is
substantial for higher fractions of missing information. In
addition, the effect of missing information is much larger in
tests for which the degrees of freedom are larger (H = 12
versus H = 4). Therefore, it is advisable to concentrate the
tests on a small number of degrees by recoding the variables
into a small number of categories if possible.
CONCLUSIONS AND DISCUSSION
Data fusion is a recent innovation for market researchers
and has been applied and developed predominantly in prac-
tice over the last ten years. Problems that lend themselves to
data fusion are relatively common in marketing research.
The demands placed on the market research industry with
respect to the collection of data are constantly increasing.
Managers need insights not only into the buying behavior of
their potential customers, but also into their demographic
and socioeconomic profiles, lifestyles, attitudes, media ex-
posure, and so on. The burden on consumers and business of
extensive mail and telephone interviews is constantly in-
creasing. Consequently, the response rates and the quality of
the data are declining. Conversely, the costs of collecting
complete single-source data are often prohibitive. Therefore,
the need to combine data from various sources is increasing,
and data fusion presents a potential solution to the problem.
Fused databases have been used frequently in practice, par-
ticularly in geo-demographic analyses and media planning
Statistical Data Fusion
(Adamek 1994). Nevertheless, data fusion is not superior to
single-source data but can be used as a viable alternative
when single-source data are unavailable or too expensive to
collect.
We have proposed an approach to data fusion that pre-
sents the possibility of performing appropriate statistical
tests on fused databases, specifically for the common situa-
tion in which nominal variables, collected from different
samples, are to be cross-tabulated. The procedure is model-
based and formulated within a finite-mixture framework. It
is a multivariate approach to file concatenation, which takes
into account all of the available information in imputing the
missing observations. It enables us to cross-classify directly
variables that are unique to two different samples and to cal-
culate simple statistical tests of association while accounting
for the uncertainty caused by the data-fusion process. Be-
cause of the relatively simple computational procedures for
imputation, several imputations can be performed, which is
required given the large amount of missing information.
Moreover, given the closed-form expression for the parame-
ter estimates in the EM estimation algorithm, the procedure
is computationally feasible for the large data sets that com-
monly occur in data-fusion problems. The proposed proce-
dure overcomes some of the limitations of the traditional
hot-deck approach, such as the subjective definition of
matching criteria and the lack of statistical properties of the
fused data. Using complete data, we provide some evidence
of the validity of the proposed procedure. The tests of asso-
ciation in each of the 80 cross-tabulations show the same
conclusions for the complete and imputed tables in 74% of
the tables. A comparison of 80 imputed tables with those ob-
tained from complete data showed a correlation of .97
across all 980 cell frequencies. In addition, the procedure
outperformed the previously used hot-deck, which produced
a correlation of .91 in the same comparison.
The imputation groups in the proposed model could pos-
sibly be interpreted as unobserved segments. However, the
purpose of our analysis is not to identify and interpret seg-
ments but to derive a convenient set of imputation groups. If
the three sets of variables are considered distinct segmenta-
tion bases, a latent markov mixture model such as the one
proposed by Ramaswamy (1997) is theoretically preferable
to our model, because it accounts for the fact that different
but related segments underlie the three sets of segmentation
bases, whereas our model assumes that one single set of im-
putation groups underlies all variables. If there were no
missing data for two of the segmentation bases for all mem-
bers of one sample, our model would be a special case of
Ramaswamy's model and could be obtained from it by im-
posing the restriction that the segment-switching matrix is
diagonal. The model proposed by Ramaswamy (1997), as
derived from earlier work by Poulsen (1990), is a useful one
for dealing with multiple segmentation bases. However, in
the context of data fusion, there are two fundamental differ-
ences between our approach and Ramaswamy's. First, our
approach considers three sets of variables (i.e., segmentation
bases). Second, two of the segmentation bases are observed
only in one of the samples. This means that Ramaswamy's
model must be extended to accommodate more than two
segmentation bases and to incorporate the ignorable missing
data structure, along the lines discussed here, before it can
be applied in the context of data fusion. We leave this ex-
497
tension for further research, because several problems must
be resolved. In particular, as noted by Ramaswamy (1997),
the extension to more than three bases complicates the iden-
tification of the optimal numbers of segments in his ap-
proach. For example, if the number of segments underlying
the three types of variables varies from one to seven, then in
the latent markov model 343 (73) different sets of solutions
must be inspected for the optimal numbers of segments
(compared to only 7 for the imputation mixture model).
Theoretically, an important determinant of the quality of
a data fusion is the number of common variables and the
strength of its relationships with the variables in the two
samples. The final quality of the data fusion therefore may
be strongly dependent on these common variables. This
holds for all data-fusion methods. In fact, no statistical pro-
cedure for data fusion can assess the partial correlation of
the two sets of unique variables given the common variables,
because the information on their partial association is not
present in the data. Therefore, any procedure for data fusion
will break down when the two sets of unique variables show
a high degree of residual association when the common vari-
ables are accounted for. This appears to be an important av-
enue for further research.
Finally, the statistical literature has not provided a com-
pletely satisfactory treatment of the problem of selecting
the optimal number of mixture components. In our empiri-
cal application, it appears that the CAlC statistic performed
satisfactorily and that the results were not sensitive to small
deviations from the optimal number of components. Further
research may resolve the problem of the selection of the
number of components in mixture models. We suggest that
further research should address the problems of the choice
of the common variables, the optimal number of imputation
groups, and the power of the test statistic as a function of
the amount of missing information for small numbers of
imputations.
APPENDIX
Here we provide the main steps of the EM algorithm:
I. At the first step of the iteration, h =0, the algorithm is initial-
ized by fixing the number of imputation groups, T, and gener-
ating a (random) starting partition of posterior probabilities,
1tit(O).
2. Given 1tit(h), estimates of the prior probabilities are obtained from
L..
N+M
(AI) ~t = niJ(N + M).
i=1
3. The 8j kt(h) are estimated in three steps for the set of variables
unique to sample A, the common variables, and the set of vari-
ables unique to sample B, from
N
'"
£... n II x IJ k
(A2)
i=1
j = I, ..., P,
i=1
498 JOURNAL OF MARKETING RESEARCH, NOVEMBER 1997

N+M Practice," Journal of the Market Research Society, 31 (4),

~ 11:.It 489-500.
£.J X
k
IJ Dempster, A. P., N. M. Laird, and R. B. Rubin (1977), "Maximum
i;J
N+M
Likelihood for Incomplete Data via the EM-Algorithm," Journal

I j;J
11: it
of the Royal Statistical Society, B39 (I), 1-38.
DeSarbo, Wayne S. and Richard L. Cron (1988), "A Maximum
Likelihood Methodology for Clusterwise Linear Regression,"
Journal of Classification, 5 (2), 249-82.
- - - , Michel Wedel, Marco Vriens, and Venkatram Ra-
N+M maswamy (1992), "Latent Class Metric Conjoint Analysis,"

i;N+l
I 1til X,jk
Marketing Letters, 3 (3), 273-88.
Dillon, William and A. Kumar (1994), "Latent Structure and Oth-
(A4) N+M er Mixture Models in Marketing: An Integrative Survey and Re-

I
i;N+J
11:'1
view," in Advanced Methods in Marketing Research, Richard P.
Bagozzi, ed. Cambridge, MA: Blackwell Publishers, 295-351.
Ford, Barry (1983), "An Overview of Hot-Deck Procedures," in In-
j = P + Q + I, ..., P + Q + R. complete Data in Sample Surveys, Vol. II, Part 2: Theory and
Bibliographies, W. G. Madow, I. Olkin, and J. B. Rubin, eds.
4. Convergence test: stop if the change in the log-likelihood from New York: Academic Press, 185-207.
iteration (h - I) to iteration (h) is sufficiently small, otherwise: Li, K. H., T. E. Raghunathan, and Donald B. Rubin (1991), "Large
5. Increment the iteration index: h f- h + I, and calculate new es- Sample Significance Levels From Multiply Imputed Data Using
timates of the posterior membership probabilities according to Moment-Based Statistics and F Reference Distribution," Journal
of the American Statistical Association, 86 (416), 1065-73.
Little, R. 1. A. and Donald B. Rubin (1987), Statistical Analysis
IT
P+Q

l]t f ij l t (Xij 19t ) with Missing Data. New York: John Wiley & Sons.
j;J Meng, Xiao-Li and Donald B. Rubin (1992), "Performing Likeli-
hood-Ratio Tests With Multiply Imputed Data Sets," Biometrika,
I IT
T P+Q
79 (I), 103-11.
l]t f ij l t (Xij 19t ) O'Brien, Sarah (1991), "The Role of Data Fusion in Actionable
t;J j;J
Media Targeting in the 1990s," Marketing & Research Today, 19
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and
Poulsen, Carsten Stig (1990), "Mixed Markov and Latent Markov
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IT
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j ; P+ 1
(A6) mentation With Panel Survey Data: An Application to New Prod-

I IT
T P+Q+R
l]t fij1t(Xij
[; 1 i> P+l
i = N + I, ..., N + M.
Go to step 2.
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