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Arbitrarily Normalized Coefficients, Information Sets, and False Reports of "Biases" in Binary Outcome Models

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Author Info

  • Thomas A. Mroz

    (Department of Economics, Clemson University)

  • Yaraslau V. Zayats

    (Bates White, LLC.)

Abstract

Empirical researchers sometimes misinterpret how additional regressors, heterogeneity corrections, and multilevel factors impact the interpretation of the estimated parameters in binary outcome models such as logit and probit. This can result in incorrect inferences about the importance of incorporating such features in these nonlinear statistical models. Some reports of biases in binary outcome models appear related to the arbitrary variance normalization required in binary outcome models. A focus on readily interpretable numerical quantities, rather than conveniently chosen "effects" as measured by arbitrarily scaled coefficients, would eliminate nearly all of the interpretation problems we highlight in this paper. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 90 (2008)
Issue (Month): 3 (August)
Pages: 406-413

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Handle: RePEc:tpr:restat:v:90:y:2008:i:3:p:406-413

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Cited by:
  1. Nicoletti, Cheti & Rondinelli, Concetta, 2006. "The (mis)specification of discrete time duration models with unobserved heterogenity: a Monte Carlo study," ISER Working Paper Series 2006-53, Institute for Social and Economic Research.
  2. Tomas Cvrcek, 2010. "America's settling down: How Better Jobs and Falling Immigration led to a Rise in Marriage, 1880 – 1930," NBER Working Papers 16161, National Bureau of Economic Research, Inc.
  3. Wolfgang Hess & Maria Persson, 2012. "The duration of trade revisited," Empirical Economics, Springer, Springer, vol. 43(3), pages 1083-1107, December.
  4. Edward C. Norton, 2012. "Log Odds and Ends," NBER Working Papers 18252, National Bureau of Economic Research, Inc.
  5. Mircea Trandafir, 2014. "The Effect of Same-Sex Marriage Laws on Different-Sex Marriage: Evidence From the Netherlands," Demography, Springer, Springer, vol. 51(1), pages 317-340, February.
  6. Hess, Wolfgang & Persson, Maria, 2010. "The Duration of Trade Revisited. Continuous-Time vs. Discrete-Time Hazards," Working Papers, Lund University, Department of Economics 2010:1, Lund University, Department of Economics.
  7. Hess, Wolfgang & Persson, Maria, 2009. "Survival and Death in International Trade - Discrete-Time Durations of EU Imports," Working Papers, Lund University, Department of Economics 2009:12, Lund University, Department of Economics.

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