CHAID, or Chi-squared Automatic Interaction Detection, is a classification method for building decision trees by using chi-square statistics to identify optimal splits.
CHAID first examines the crosstabulations between each of the input fields and
the outcome, and tests for significance using a chi-square independence test. If more than one of
these relations is statistically significant, CHAID will select the input field that is the most
p value). If an input has more than two categories, these are
compared, and categories that show no differences in the outcome are collapsed together. This is
done by successively joining the pair of categories showing the least significant difference. This
category-merging process stops when all remaining categories differ at the specified testing level.
For nominal input fields, any categories can be merged; for an ordinal set, only contiguous
categories can be merged.
Exhaustive CHAID is a modification of CHAID that does a more thorough job of examining all possible splits for each predictor but takes longer to compute.
Requirements. Target and input fields can be continuous or categorical; nodes can be split into two or more subgroups at each level. Any ordinal fields used in the model must have numeric storage (not string). If necessary, the Reclassify node can be used to convert them.
Strengths. Unlike the C&R Tree and QUEST nodes, CHAID can generate nonbinary trees, meaning that some splits have more than two branches. It therefore tends to create a wider tree than the binary growing methods. CHAID works for all types of inputs, and it accepts both case weights and frequency variables.