Charlie said
My model is compounded. That is,
Y=X1+X2+X3 (Y= binary dependent variable with very rare case of "1")
but, one independent variable of the equation (X2, continuous
variables) is a function of X1; X2=X1+ X4
As you see in the above, the major independent variable is X1.
X1 has a direct effect on Y and also an indirect effect via X2 on Y.
I want to estimate X1's direct and indirect effects via on Y.
If X2 is a deterministic function of X1, then just substitute its
equation into the main equation, and estimate
logit y x1 x4 x3
If the original logit is I = b0 + b1 x1 + x2 x2 + b3 x3 + error, then
you are now estimating
I = b0 + (b1+b2) x1 + b2 x4 + b3 x3 + error
and you can calculate the direct effect of x1 as its estimated
coefficient minus b2-hat, using lincom.
Kit Baum, Boston College Economics and DIW Berlin
http://ideas.repec.org/e/pba1.html
An Introduction to Modern Econometrics Using Stata:
http://www.stata-press.com/books/imeus.html
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