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Simplified Marginal Effects in Discrete Choice Models

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  • Newell, Richard

    ()
    (Resources for the Future)

  • Anderson, Soren

Abstract

We show that after a simple normalization of explanatory variables so that they equal zero at some desired reference point, marginal effects for continuous variables in probit and logit models simplify dramatically, becoming a function of only the estimated constant term. We present similar simplifications for computation of the asymptotic variance of marginal effects, as well as for the effects of dummy variables on predicted probabilities. We provide a simple table, which in combination with raw probit or logit estimates, is all one needs to compute the desired effects.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-03-38.

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Date of creation: 01 Dec 2003
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Handle: RePEc:rff:dpaper:dp-03-38

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Keywords: logit; probit; discrete choice; binary choice; marginal effect; data normalization;

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Cited by:
  1. Anderson, Soren T. & Newell, Richard G., 2004. "Information programs for technology adoption: the case of energy-efficiency audits," Resource and Energy Economics, Elsevier, vol. 26(1), pages 27-50, March.
  2. Banerjee, Swagata (Ban) & Martin, Steven W. & Roberts, Roland K. & Larson, James A. & Hogan, Robert J., Jr. & Johnson, Jason L. & Paxton, Kenneth W. & Reeves, Jeanne M., 2007. "Adoption of Conservation-Tillage Practices in Cotton Production," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34842, Southern Agricultural Economics Association.
  3. Carlevaro, Fabrizio & Senegas, Marc-Alexandre, 2006. "Simplified marginal effects in discrete choice models: A correction," Economics Letters, Elsevier, vol. 92(1), pages 44-46, July.
  4. Elias Katsikas & Theologos Dergiades, 2012. "Revising higher education policy in Greece: filling the Danaids’ Jar," Empirica, Springer, vol. 39(3), pages 279-292, August.
  5. Pambo, Kennedy & Mugivane, Fred, 2014. "Prospects for Biofortification Reducing Micronutrient Deficiency in Kenya: Lessons from Sugar Fortification Programmes," 18th ICABR Conference, June 17-20, 2014, Nairobi, Kenya 174531, International Consortium on Applied Bioeconomy Research (ICABR).
  6. Elias Katsikas & Theologos Dergiades, 2009. "Higher Education Policy in Greece: Filling the Danaids' Jar," Discussion Paper Series 2009_16, Department of Economics, University of Macedonia, revised Nov 2009.
  7. Don Webber & Martin Freke, 2003. "Church Organists:Analysing their Willingness to Play," Working Papers 0309, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  8. Grammenos, Costas Th. & Papapostolou, Nikos C., 2012. "US shipping initial public offerings: Do prospectus and market information matter?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(1), pages 276-295.

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