IDEAS home Printed from https://ideas.repec.org/a/zbw/espost/126083.html
   My bibliography  Save this article

On Interaction Effects: The Case of Heckit and Two-part Models

Author

Listed:
  • Frondel, Manuel
  • Vance, Colin

Abstract

Interaction effects capture the impact of one explanatory variable x1 on the marginal effect of another explanatory variable x2. To explore interaction effects, so-called interaction terms x1x2 are typically included in estimation specifications. While in linear models the effect of a marginal change in the interaction term is equal to the interaction effect, this equality generally does not hold in non-linear specifications (AI, NORTON, 2003). This paper provides for a general derivation of interaction effects in both linear and non-linear models and calculates the formulae of the interaction effects resulting from HECKMAN's sample selection model as well as the Two-Part Model, two regression models commonly applied to data with a large fraction of either missing or zero values in the dependent variable, respectively. Drawing on a survey of automobile use from Germany, we argue that while it is important to test for the significance of interaction effects, their size conveys limited substantive content. More meaningful, and also more easy to grasp, are the conditional marginal effects pertaining to two variables that are assumed to interact.

Suggested Citation

  • Frondel, Manuel & Vance, Colin, 2013. "On Interaction Effects: The Case of Heckit and Two-part Models," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 233(1), pages 22-38.
  • Handle: RePEc:zbw:espost:126083
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/126083/1/Frondel_2013_On-interaction-effects.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:zbw:rwidps:0039 is not listed on IDEAS
    2. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June.
    3. Duan, Naihua, et al, 1984. "Choosing between the Sample-Selection Model and the Multi-part Model," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(3), pages 283-289, July.
    4. Frondel, Manuel & Vance, Colin, 2010. "Driving for fun? Comparing the effect of fuel prices on weekday and weekend fuel consumption," Energy Economics, Elsevier, vol. 32(1), pages 102-109, January.
    5. White, Michelle J, 1986. "Sex Differences in Urban Commuting Patterns," American Economic Review, American Economic Association, vol. 76(2), pages 368-372, May.
    6. Bun Song Lee & John F. McDonald, 2003. "Determinants of Commuting Time and Distance for Seoul Residents: The Impact of Family Status on the Commuting of Women," Urban Studies, Urban Studies Journal Limited, vol. 40(7), pages 1283-1302, June.
    7. Manuel Frondel & Jorg Peters & Colin Vance, 2008. "Identifying the Rebound: Evidence from a German Household Panel," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 145-164.
    8. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    9. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    10. Colin Vance, 2009. "Marginal effects and significance testing with Heckman's sample selection model: a methodological note," Applied Economics Letters, Taylor & Francis Journals, vol. 16(14), pages 1415-1419.
    11. Greene, William, 2010. "Testing hypotheses about interaction terms in nonlinear models," Economics Letters, Elsevier, vol. 107(2), pages 291-296, May.
    12. Manuel Frondel & Colin Vance, 2009. "Do High Oil Prices Matter? Evidence on the Mobility Behavior of German Households," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(1), pages 81-94, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pfeiffer, Birte & Mulder, Peter, 2013. "Explaining the diffusion of renewable energy technology in developing countries," Energy Economics, Elsevier, vol. 40(C), pages 285-296.
    2. Simo Fotso, Arlette, 2017. "Child disability and siblings' healthcare expenditures in a context of child fostering," Social Science & Medicine, Elsevier, vol. 182(C), pages 89-96.
    3. Wang, Jing & Lyu, Kaiyu & Lv, Xinye & Feil, Jan-Henning, 2021. "Rainfall Risk and Nonfarm Self-Employment in Rural China: Does Digital Finance Have a Role to Play?," 2021 Conference, August 17-31, 2021, Virtual 315326, International Association of Agricultural Economists.
    4. Osarumwense Osabuohien-Irabor & Igor Mikhailovich Drapkin, 2024. "The spillover effects of outward FDI on environmental sustainability in developing countries: exploring the channels of home country institutions and human capital," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(8), pages 20597-20627, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Manuel Frondel & Colin Vance, 2012. "On Interaction Effects: The Case of Heckit and Two-Part Models," Ruhr Economic Papers 0309, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    2. repec:zbw:rwirep:0309 is not listed on IDEAS
    3. Frondel, Manuel & Vance, Colin, 2012. "Interpreting the Outcomes of two-part models," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 19(10), pages 987-992.
    4. Frondel, Manuel & Vance, Colin, 2009. "On Marginal and Interaction Effects: The Case of Heckit and Two-Part Models," Ruhr Economic Papers 138, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Manurl Frondel & Colin Vance, 2009. "On Marginal and Interaction Effects: The Case of Heckit and Two-Part Models," Ruhr Economic Papers 0138, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    6. repec:zbw:rwirep:0138 is not listed on IDEAS
    7. Manuel Frondel & Colin Vance, 2009. "Driving for Fun? – A Comparison of Weekdays and Weekend Travel," Ruhr Economic Papers 0103, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Frondel, Manuel & Vance, Colin, 2009. "Driving for Fun? – A Comparison of Weekdays and Weekend Travel," Ruhr Economic Papers 103, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Frondel, Manuel & Vance, Colin, 2010. "Driving for fun? Comparing the effect of fuel prices on weekday and weekend fuel consumption," Energy Economics, Elsevier, vol. 32(1), pages 102-109, January.
    10. Grimes, Matthew G. & Gehman, Joel & Cao, Ke, 2018. "Positively deviant: Identity work through B Corporation certification," Journal of Business Venturing, Elsevier, vol. 33(2), pages 130-148.
    11. repec:zbw:rwirep:0103 is not listed on IDEAS
    12. repec:zbw:rwirep:0209 is not listed on IDEAS
    13. Chevassus-Lozza, Emmanuelle & Gaigné, Carl & Le Mener, Léo, 2013. "Does input trade liberalization boost downstream firms' exports? Theory and firm-level evidence," Journal of International Economics, Elsevier, vol. 90(2), pages 391-402.
    14. Christopher Marquis & Cuili Qian, 2014. "Corporate Social Responsibility Reporting in China: Symbol or Substance?," Organization Science, INFORMS, vol. 25(1), pages 127-148, February.
    15. Frondel, Manuel & Vance, Colin, 2011. "Rarely enjoyed? A count data analysis of ridership in Germany's public transport," Transport Policy, Elsevier, vol. 18(2), pages 425-433, March.
    16. Goic, Marcel & Rojas, Andrea & Saavedra, Ignacio, 2021. "The Effectiveness of Triggered Email Marketing in Addressing Browse Abandonments," Journal of Interactive Marketing, Elsevier, vol. 55(C), pages 118-145.
    17. Sanoran, Kanyarat (Lek), 2018. "Auditors’ going concern reporting accuracy during and after the global financial crisis," Journal of Contemporary Accounting and Economics, Elsevier, vol. 14(2), pages 164-178.
    18. Sèna Kimm Gnangnon, 2012. "Structural Vulnerability and Excessive Public Indebtedness in CFA Franc Zone Countries," Working Papers halshs-00749470, HAL.
    19. Fischer, Timo & Henkel, Joachim, 2013. "Complements and substitutes in profiting from innovation—A choice experimental approach," Research Policy, Elsevier, vol. 42(2), pages 326-339.
    20. Coupe, Tom & Obrizan, Maksym, 2016. "The impact of war on happiness: The case of Ukraine," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PA), pages 228-242.
    21. Siobhan Austen & Rachel Ong & Richard Seymour, 2013. "Alternative Methods of Estimating Interaction Effects in Non-Linear Models," Bankwest Curtin Economics Centre Working Paper series WP1311, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
    22. Ferreira Sequeda, Maria & Künn, Annemarie & de Grip, Andries, 2016. "Work-related learning and skill development in Europe: Does initial skill mismatch matter?," Research Memorandum 027, Maastricht University, Graduate School of Business and Economics (GSBE).
    23. Manuel Frondel & Colin Vance, 2010. "A Count Data Analysis of Ridership in Germany’s Public Transport," Ruhr Economic Papers 0209, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    24. Raschky, Paul A. & Schwindt, Manijeh, 2012. "On the channel and type of aid: The case of international disaster assistance," European Journal of Political Economy, Elsevier, vol. 28(1), pages 119-131.

    More about this item

    Keywords

    Truncated regression models; interaction terms;

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:espost:126083. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zbwkide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.