Marginal and Interaction Effects in Ordered Response Models
AbstractIn discrete choice models the marginal effect of a variable of interest that is interacted with another variable differs from the marginal effect of a variable that is not interacted with any variable. The magnitude of the interaction effect is also not equal to the marginal effect of the interaction term. I present consistent estimators of both marginal and interaction effects in ordered response models. This procedure is general and can easily be extended to other discrete choice models. I also provide an example using household survey data on food security in Bangladesh. Results show that marginal effects of interaction terms are estimated by standard statistical software (STATA® 10) with very large error and even with wrong sign.
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Bibliographic InfoPaper provided by Economics and Econometrics Research Institute (EERI), Brussels in its series EERI Research Paper Series with number EERI_RP_2009_22.
Length: 10 pages
Date of creation: 09 2009
Date of revision:
Marginal effect; interaction effect; ordered probit; discrete choice.;
Other versions of this item:
- Debdulal Mallick, 2008. "Marginal and Interaction Effects in Ordered Response Models," Economics Series 2008_13, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
- Mallick, Debdulal, 2008. "Marginal and Interaction Effects in Ordered Response Models," MPRA Paper 9617, University Library of Munich, Germany.
- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-09-26 (All new papers)
- NEP-DCM-2009-09-26 (Discrete Choice Models)
- NEP-ECM-2009-09-26 (Econometrics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
- Spanos,Aris, 1999. "Probability Theory and Statistical Inference," Cambridge Books, Cambridge University Press, number 9780521424080, October.
- Stefan Boes & Rainer Winkelmann, 2005.
"Ordered Response Models,"
0507, University of Zurich, Socioeconomic Institute.
- Jing Lan & Alistair Munro, 2012. "Environmental Compliance and Human Capital: Evidence from Chinese Industrial Firms," GRIPS Discussion Papers 12-05, National Graduate Institute for Policy Studies.
- Debdulal Mallick & Mohammad Rafi, 2008. "Are the Female Headed Households More Food Insecure? Evidence from Bangladesh," Economics Series 2008_08, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
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