Variance partitioning in multilevel models for count data

A first step when fitting multilevel models to continuous responses is to explore the degree of clustering in the data. Researchers fit variance-component models and then report the proportion of variation in the response that is due to systematic differences between clusters or equally the response correlation between units within a cluster. These statistics are popularly referred to as variance partition coefficients (VPCs) and intraclass correlation coefficients (ICCs). When fitting multilevel models to categorical (binary, ordinal, or nominal) and count responses, these statistics prove more challenging to calculate. For categorical response models, researchers frequently appeal to their latent response formulations and report VPCs/ICCs in terms of latent continuous responses envisaged to underly the observed categorical responses. For standard count response models, however, there are no corresponding latent response formulations. More generally, there is a paucity of guidance on how to partition the variance. As a result, applied researchers are likely to avoid or inadequately report and discuss the substantive importance of clustering and cluster effects in their studies. A recent article drew attention to a little-known algebraic expression for the VPC/ICC for the special case of the two-level random-intercept Poisson model. In this article, we make a substantial new contribution. First, we derive VPC/ICC expressions for the more flexible negative binomial model that allows for overdispersion, a phenomenon which often occurs in practice with count data. Then we derive VPC/ICC expressions for three-level and random-coefficient extensions to these models. We illustrate all our work with an application to student absenteeism.