<p>In order to estimate probability of default, banks and other financial institutions have often used logistic regression based on data involving credit history.</p>

<p>Suppose an entrepreneur or borrower with little credit or business history goes to a bank or some financial institution to borrow money.</p>

<p>Banks can use, as an alternative to a credit or business history, 'psychometric' or 'behavioural' tests. Hence, the bank will use some psychometric data, instead or with credit history data when using logistic regression to estimate probability of default.</p>

<p>How can Bayesian inference improve upon such logistic regression wherein psychometric data is used?</p>

<p>I previously asked about the <a href="https://stats.stackexchange.com/questions/163034/bayesian-logit-model-intuitive-explanation">Bayesian logit model</a> and <a href="https://cogsci.stackexchange.com/questions/10721/how-can-psychometric-or-behavioural-tests-be-used-in-banking-to-evaluate-creditw">psychometrics</a>.</p>

<p>So far, all I found are these EFL papers: <a href="http://www.hks.harvard.edu/fs/akhwaja/papers/EFLpaper2013.pdf" rel="nofollow noreferrer">1</a> <a href="https://www.eflglobal.com/wp-content/uploads/2014/09/EFL-Technical-Note-July-2012_s.pdf" rel="nofollow noreferrer">2</a></p>

<p>Anyone know any other literature out there?</p>

CC BY-SA 3.0
2015-09-07T16:05:24.003Z
There's really nothing special about psychometric data in this regard, all of the usual advantages (and disadvantages) of Bayesian analyses, which have been well covered in your CrossValidated question, apply as well to psychometric data as to any other kind of analysis. What are you hoping to learn here?
Eoin
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2015-09-08T00:12:40.830Z
Thanks @Eoin ! Which part in the CV question gives an advantage of Bayesian analyses? It seems to explain it. I don't see any advantages involved
BCLC
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2015-09-10T08:32:23.720Z
@MaríaAnt Edited. Still think it should go to CV?
BCLC
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2015-09-10T08:49:18.810Z
I think this is a suitable question. Bayesian analyses ask different questions than frequentist analyses, and that difference matters more in behavioral science than other areas.
Christian Hummeluhr
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2015-09-10T09:10:03.657Z
@ChristianHummeluhr That may not be before my last edit ^^;
BCLC
CC BY-SA 3.0
2015-09-10T12:52:52.843Z
I'm not sure if the question is really Bayesian specific. It seems like the basic question is whether incorporating psychometrics can improve a prediction of whether a person will default or not.
Josh
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2015-09-10T13:07:32.107Z
@Josh It's supposed to be how Bayesian can improve a prediction given that psychometric data is used
BCLC
CC BY-SA 3.0
2016-06-10T13:32:25.627Z
I'm voting to close this question as off-topic because Should go to CrossValidate.SE
Robin Kramer-ten Have
<measurement><experimental-psychology><statistics><psychology><bayesian>
How can Bayesian inference improve upon logistic regression in incorporating psychometric data?
BCLC
# How can Bayesian inference improve upon logistic regression in incorporating psychometric data?

(Asked by: username_0 on 2015-09-07)

In order to estimate probability of default, banks and other financial institutions have often used logistic regression based on data involving credit history.

Suppose an entrepreneur or borrower with little credit or business history goes to a bank or some financial institution to borrow money.

Banks can use, as an alternative to a credit or business history, 'psychometric' or 'behavioural' tests. Hence, the bank will use some psychometric data, instead or with credit history data when using logistic regression to estimate probability of default.

How can Bayesian inference improve upon such logistic regression wherein psychometric data is used?

I previously asked about the [Bayesian logit model](https://stats.stackexchange.com/questions/163034/bayesian-logit-model-intuitive-explanation) and [psychometrics](https://cogsci.stackexchange.com/questions/10721/how-can-psychometric-or-behavioural-tests-be-used-in-banking-to-evaluate-creditw).

So far, all I found are these EFL papers: [1](http://www.hks.harvard.edu/fs/akhwaja/papers/EFLpaper2013.pdf) [2](https://www.eflglobal.com/wp-content/uploads/2014/09/EFL-Technical-Note-July-2012_s.pdf)

Anyone know any other literature out there?

**Tags:** measurement, experimental-psychology, statistics, psychology, bayesian

> **Comments:**
> **username_1**: There's really nothing special about psychometric data in this regard, all of the usual advantages (and disadvantages) of Bayesian analyses, which have been well covered in your CrossValidated question, apply as well to psychometric data as to any other kind of analysis. What are you hoping to learn here?  
> **username_0**: Thanks @username_1 ! Which part in the CV question gives an advantage of Bayesian analyses? It seems to explain it. I don't see any advantages involved  
> **username_0**: @MaríaAnt Edited. Still think it should go to CV?  
> **username_2**: I think this is a suitable question. Bayesian analyses ask different questions than frequentist analyses, and that difference matters more in behavioral science than other areas.  
> **username_0**: @ChristianHummeluhr That may not be before my last edit ^^;  
> **username_3**: I'm not sure if the question is really Bayesian specific. It seems like the basic question is whether incorporating psychometrics can improve a prediction of whether a person will default or not.  
> **username_0**: @username_3 It's supposed to be how Bayesian can improve a prediction given that psychometric data is used  
> **username_4**: I'm voting to close this question as off-topic because Should go to CrossValidate.SE  

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