The document is a presentation on missing data analysis methods, presented by Sri Krishnamurthy at the Boston Data Festival in 2016. It discusses the challenges and various approaches for handling missing data, including deletion and imputation methods, along with their advantages and disadvantages. The presentation emphasizes the importance of minimizing bias and maximizing the use of available information in data analysis.

1. Location:
Boston Data Festival
September 23rd 2016
What’s Missing ? Methods in missing data
analysis
2016 Copyright QuantUniversity LLC.
Presented By:
Sri Krishnamurthy, CFA, CAP
www.QuantUniversity.com
sri@quantuniversity.com

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9.  Definition
 Assumptions
 Work flow

10. What does a missing data problem look like?

11. Missing data
• Dealing with missing data, has been always a challenge in data analysis context.
• We need methods in missing data analysis that:
▫ Minimize the bias
▫ Maximize use of available information, and
▫ Get good estimates of uncertainty e.g., p-value, confidence interval, etc.
Rec No Variable n
1 Unit non-response Unobserved/Latent
variable
2
3 Missing data
4 Item-non-
response

12. Assumptions (MCAR, MAR, NMAR)
• When values are missing completely at random (MCAR), the probability of
missingness is unrelated to the values of any variable
• Data are missing at random (MAR) if missingness is unrelated to the value that
is missing, but is related to the values of other variables
• E.g., a question about typical number of hours spent browsing the internet
might be missing more often for married than unmarried participants; BUT
among the married subset, missingness is completely random—Not related
to how many hours the person browses
• Data are missing not at random (MNAR) if missingness is related to the value
that is missing, and often to the values of other variables as well
• E.g. missing values are more prevalent among those who typically browse
more than among those who browse less

14. • Deletion methods : Delete cases or variables that are missing
▫ Listwise methods
▫ Pairwise deletion
▫ Variable deletion
• Imputation methods : Substitution methods
▫ Single imputation
 Mean imputation
 Conditional mean imputation
 Case mean imputation
 Regression imputation
 Last observation carried forward
 Worst case imputation
 Best case imputation
 EM imputation
▫ Multiple imputation
Methods of handling missing data

15. List wise deletion
• A good method when the proportion of
missing data is less than 15%.
• Advantages:
▫ It can be used for any type of statistical
analysis.
▫ No special computations are required.
▫ The parameters estimations are
unbiased.
▫ The standard errors are appropriate
compare to original data.
• Disadvantages:
▫ May remove a considerable fraction of
data

16. Pair wise deletion
• Pairwise deletion involves dropping cases
with missing values on an analysis-by-
analysis basis
• Advantages:
▫ Using all available non-missing data
• Disadvantages:
▫ Estimated standard errors and test
statistics are biased

17. Variable deletion
• Variable deletion involves dropping
variables with missing values on an case -
by-case basis
• Advantages:
▫ Makes sense when lot of missing values in
a variable and if the variable is of relatively
less importance
• Disadvantages:
▫ Loss of information regarding the variable

18. Mean imputation
• Replace missing values with the mean of
that variable Case Var1 Var2 Var3
1 9 8 8
2 7.44 7 6
3 8 5 6
4 7 4 5
5 9 5 7
6 8 8 9
7 6 7 6
8 5 9 7
9 7 8 ?
10 8 8 7

19. Conditional Mean imputation
• Replace missing values with value of the
variable mean for a relevant subgroup
Case Var1 Sex Var2 Var3
1 9 F 8 8
2 8.25 F 7 6
3 8 F 5 6
4 7 F 4 5
5 9 F 5 7
6 8 M 8 9
7 6 M 7 6
8 5 M 9 7
9 7 M 8 ?
10 8 M 8 7

20. Case Mean imputation
• Replace missing values using information
from other variables for the same case to
impute the missing value
Case Var1 Var2 Var3
1 9 8 8
2 6.50 7 6
3 8 5 6
4 7 4 5
5 9 5 7
6 8 8 9
7 6 7 6
8 5 9 7
9 7 8 ?
10 8 8 7

21. Regression imputation
• Replace missing values using information
from complete cases to “predict” the
value of the missing data, based on a
regression equation for cases with
nonmissing values
Case Var1 Var2 Var3
1 9 8 8
2 6.32 7 6
3 8 5 6
4 7 4 5
5 9 5 7
6 8 8 9
7 6 7 6
8 5 9 7
9 7 8 ?
10 8 8 7
VAR1′ = 4.621 – (.734 * VAR2) + (1.139 * VAR3)

22. • Imputes the missing value as a
value on the same outcome the
most recent time it was observed
• Variants :
• Average of T1 and T2
Last observation carried forward
Case T1 T2 T3
1 9 8 8
2 ? 7 6
3 8 5 6
4 7 4 5
5 9 5 7
6 8 8 9
7 6 7 6
8 5 9 7
9 7 8 8
10 8 8 7

23. • Use interpolation to fill in missing
values
• Useful for longitudinal datasets
Interpolation

24. • Worst case replaces a missing value with the worst case scenario for a
categorical outcome
• Best case replaces a missing value with the best case scenario for a
categorical outcome
Worst case and Best case imputation

25. • Substitute best missing values using
a ML imputation
• In the E-step, expected values are
calculated based on all complete
data points
• In the M-step, the procedure
imputes the expected values from
the E-step and then maximizes the
likelihood function to obtain new
parameter estimates
Expectation-Maximization

26. • Multiple imputation is quickly
becoming the “gold standard”
approach to handling missing
values
• Computationally complex
Multiple imputation

27. Summary
We have covered Missing data
Introduction  Missing data definition, assumptions and work flow
Deletion methods  Listwise methods
 Pairwise deletion
 Variable deletion
Imputation methods  Single imputation
 Mean imputation
 Conditional mean imputation
 Case mean imputation
 Regression imputation
 Last observation carried forward
 Worst case imputation
 Interpolation
 Best case imputation
 EM imputation
 Multiple imputation
References

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30. Thank you!
Sri Krishnamurthy, CFA, CAP
Founder and CEO
srikrishnamurthy
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