Latent Class joint Utility

Question

Hello,

I wanted to ask the best mathematical equation to generate a single utility algorithm after generating Latent Class utilities, As from Latent Class we get the utilities for each group separately.

So if we assumed 2 groups, group 1 with 40% segment share & group 2 with a 60% segment share then will the joint utility for every level be as follows:
(Ugp1*0.4)+(Ugp2*0.6)

also, I wanted to ask about the importance/use/significance of the average maximum membership probability reported towards the end of the estimation results report.

Regards'

Answer 1

From the documentation, I'm seeing that it is a simple weighted average of the group utilities and the weights being the probability of group membership (https://www.sawtoothsoftware.com/help/lighthouse-studio/manual/index.html?hid_smrt_useslatent.html).

However, generally we would recommend to use HB to produce individual-level utilities.  This allows respondents to be unique, rather than be constrained to a weighted average of the groups.

I think the main use of average probability membership is one part of evaluating cluster solutions if you are trying to pick between, say, a 3 group versus a 4 group solution.  Higher probability on average would indicate a "stronger" cluster solution, and would be used alongside other things like how many people are in each cluster, etc. to help you choose with N-group solution to move forward with.

Comments

Thank you very much Brian for your reply and explanation. Indeed I will use HB to generate the individual utilities along the way it is just that I need to compare the results from both methods when I present my research.
Have a good day.