Using Piecewise Linear Functions
Hi,
BattleWiki states " Since we're using logged values, the slope is obtained by adding the two estimates together". I am wondering if we are not using log link function, how do we obtain the slope?
Hi,
BattleWiki states " Since we're using logged values, the slope is obtained by adding the two estimates together". I am wondering if we are not using log link function, how do we obtain the slope?
Comments
I don't think it's possible to write down a general approach here. It would involve undoing the link function and depends on whether the scale of the variable used in the hinge function matches the scale of the link function. Broadly speaking, if the variable used matches the scale of the link function, e.g. if the link function is the cube root then the continuous variable is cube-rooted too, take the hinge function coefficients, undo the scaling (e.g. cube) and then multiply the results together.
You're almost certainly going to be asked about the log link function in insurance contexts because it lends itself to producing a multiplicative rating plan.
makes sense, thanks!