THE MEASURE OF FIT AND CUT-OFF POINT FOR A BINOMIAL LOGIT MODEL. AN OVERLOOKED CONTRIBUTION OF JAN SALOMON CRAMER
THE MEASURE OF FIT AND CUT-OFF POINT FOR A BINOMIAL LOGIT MODEL. AN OVERLOOKED CONTRIBUTION OF JAN SALOMON CRAMER

Summary/Abstract: Research background: This paper revisits the contribution of Jan Salomon (Mars) Cramer (1928-2014) to binomial logit modelling. Cramer proposed both a novel measure of fit for binomial logit models and a cut-off point for binary classification, particularly suitable for unbalanced samples. Purpose: To present and demonstrate J.S. Cramer's often-overlooked proposals for a new measure of fit and a cut-off point in binomial logit models. Additionally, the paper discusses the relevance of Cramer's contributions in the current discourse on binomial logit modelling. Research methodology: The study is based on a literature analysis aimed at establishing the current state of knowledge regarding J.S. Cramer's contributions to binomial logit modelling, including the citation analysis using Scopus. Results: We highlight that the measure of fit proposed by Cramer in 1999, known as Cramer's lambda, has gained recognition in the literature under a different name - Tjur's D - introduced a decade later (2009). We also note that Cramer's proposed cut-off point, alpha, is rarely cited as an alternative to more commonly referenced thresholds. These arguments are illustrated with a numerical example. Novelty: Both of J.S. Cramer's proposals remain relatively unknown today. We hope this paper contributes to re-establishing Mars Cramer's legacy in econometrics. Cramer's lambda and Cramer's alpha deserve recognition and adoption as legitimate standards for binomial logit modelling.

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