CHAID
Example: Opening of Cinema/
Children’s Park/Exhibition Center
• To find consumer responses to opening
of Cinema, Children’s park or Exhibition
• 903 respondents were asked to rate
each alternative on a 5 point scale:
1(v.low) to 5 (v.high)
• The analyst also collected demographic
data on the respondents
Example: Opening of Cinema/ Children’s
Park/Exhibition Center
• Dependent var - % of positive responses
• Indep variables (with coding in parenthesis)
Gender: Male (1), Female (2)
Age: 16-20 (1)
21-24 (2)
25-34 (3)
35-44 (4)
45-54 (5)
55-64 (6)
65+ (7)
Socio-economic group had 6
categories:A(1), B(2), C1(3), C2(4) etc
Chi-Squared Automatic Interaction
Detection(CHAID)
• CHAID is a dependence method.
• For given dep var. we want technique that can
1. Indicate indep. var. that most affect dep.
var.
2. Identify mkt. segments that differ most on
these important. indep. var.
• Early interaction detection method is AID
• AID employs hierarchical binary splitting
algorithm
CHAID
• General procedure
1. First select indep. var. whose subgroups
differ most w.r.t dep. var.
2. Each subgroup of this var. is further
divided into subgroups on remaining
variables
3. These subgroups are tested for differences
on dep. var.
4. Var. with greatest difference is selected
next
5. Continue until subgroups are too small
Automatic Interaction Detection: AID
• Brief description of AID
1. Designate dep. and indep. Variables
2. Each indep. var. divided into categories
3. Split population into 2 groups on “best”indep.
var.
4. Further dichotomize each of these groups
successively
5. Continue splitting each resulting subgroups
until no indep. var. meets selection criteria
AID
• Limitations of AID
1. Not a classical statistical model
2. Hypothesis and inference tests not possible
3. Multivariable not multivariate procedure. All
variables are not considered
simultaneously
4. Does not adjust for fact that there are many
ways to dichotomize indep. variable
CHAID
• CHAID is more flexible than AID
• Advantages of CHAID over AID
1. All var. dep. or indep. can be categorical
2. CHAID selects indep. var. using Chisquare test.
3. CHAID not restricted to binary splits
4. Solves problem of simultaneous
inference using Bonferroni multiplier
5. Automatically tests for and merges pairs of
homogenous categories in indep. var.
CHAID
• CHAID distinguishes 3 types of indep. variables
- Monotonic
- Free
- Floating
• Basic components of CHAID analysis
1. A categorical dep. var.
2. A set of categorical indep. variables
3. Settings for various CHAID parameters
4. Analyze subgroups and identify “best” indep.
var.