How to Calculate a Likelihood Ratio
- 1). Compute the likelihood of the data under the simpler model. The likelihood of the data set is the product of the likelihoods of each data point. In all but the very simplest cases, this will be computed by a statistics program. In very simple cases, it can be computed with a calculator.
- 2). Compute the likelihood of the data under the more complex model. This is done in the same way as the likelihood of the simpler model.
- 3). Compute the ratio of the likelihood of the simpler model divided by the likelihood of the more complex model.
- 4). Compute the natural (base e) logarithm of the ratio. Multiply this by -2.
- 5). Find the number of parameters in the simpler model. Find the number of parameters in the more complex model. Compute the difference in number of parameters.
- 6). Compare the value found in Step 4 to a chi-squared distribution with degrees of freedom equal to the difference in parameters found in Step 5. This can be done by the statistics program or by looking in a table in a statistics book.
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