Count Dependent Variables
Chapter Preview. In this chapter, the dependent variable y is a count, taking on values of zero, one, and two, and so on, which describes a number of events. Count dependent variables form the basis of actuarial models of claims frequency. In other applications, a count dependent variable may be the number of accidents, the number of people retiring, or the number of firms becoming insolvent.
The chapter introduces Poisson regression, a model that includes explanatory variables with a Poisson distribution for counts. This fundamental model handles many datasets of interest to actuaries. However, with the Poisson distribution, ...