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An Advantage of the Linear Probability Model over Probit or Logit

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  • Caudill, Steven B

Abstract

Linear probability models, logit models, and probit models have been used to estimate dichotomous choice models in the past, but recently, the linear probability model has fallen into disfavor because it can yield predicted probabilities outside the 0-1 interval. However, there are some parameters of interest that can be estimated in the linear probability model, but not in either logit or probit models. If the model contains a dummy variable for membership in some group, and every member of the group has the same value for the dependent variable, the coefficient of the group dummy variable cannot be estimated in logit or probit models, but can be estimated in the linear probability model. Copyright 1988 by Blackwell Publishing Ltd

Suggested Citation

  • Caudill, Steven B, 1988. "An Advantage of the Linear Probability Model over Probit or Logit," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 50(4), pages 425-427, November.
  • Handle: RePEc:bla:obuest:v:50:y:1988:i:4:p:425-27
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    1. Evans, Mary F. & Smith, V. Kerry, 2005. "Do new health conditions support mortality-air pollution effects?," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 496-518, November.
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    7. Dalmau, Oscar & Alarcón, Teresa E. & González, Graciela, 2015. "Kernel multilogit algorithm for multiclass classification," Computational Statistics & Data Analysis, Elsevier, vol. 82(C), pages 199-206.
    8. Hotchkiss, Julie L., 2014. "Adjusted Employment-to-Population Ratio as an Indicator of Labor Market Strength," FRB Atlanta Working Paper 2014-8, Federal Reserve Bank of Atlanta.
    9. William Greene, 2007. "Discrete Choice Modeling," Working Papers 07-6, New York University, Leonard N. Stern School of Business, Department of Economics.
    10. Adrian C. Darnell, 1994. "A Dictionary Of Econometrics," Books, Edward Elgar Publishing, number 118.
    11. Rodon Casarramona, Toni & Guinjoan, Marc, 2018. "Mind the protest gap : the role of resources in the face of economic hardship," LSE Research Online Documents on Economics 87159, London School of Economics and Political Science, LSE Library.
    12. Heckemeyer, Jost H. & Richter, Katharina & Spengel, Christoph, 2014. "Tax planning of R&D intensive multinationals," ZEW Discussion Papers 14-114, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    13. Deborah Cobb-Clark & Marie D. Connolly & Christopher Worswick, 2001. "The Job Search and Investments of Immigrant Families," CEPR Discussion Papers 432, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    14. Li, Li & Liu, Haoming, 2014. "Primary school availability and middle school education in rural China," Labour Economics, Elsevier, vol. 28(C), pages 24-40.

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