# Re: st: Interaction effect or running seperate models

 From "Quang Nguyen" To statalist@hsphsun2.harvard.edu Subject Re: st: Interaction effect or running seperate models Date Thu, 27 Sep 2007 21:53:17 -1000

```Dear Richard and Clive,

With gratitude!

Quang

On 9/27/07, Richard Williams <Richard.A.Williams.5@nd.edu> wrote:
> At 12:07 AM 9/28/2007, Quang Nguyen wrote:
> >Dear Clive et al,
> >
> >Thanks! Yes, I certainly understand that. However, it is not my
> >question. I am actually interested in the situation in which the
> >effect is significant when we run seperate estimations, whereas the
> >interaction term in the signle equation is not significant. Perhaps,
> >an example will clarify this.
> >
> >Suppose: Y= a0+ a1*x + u
> >Let Z is  binary variable. Now, we can run two sperate OLS for Z=1 and
> >Z=0.Suppose that a1 is significant for the OLS for Z=1
> >
> >Alternatively, we have a single equation with interaction term:
> >
> >Y= m0 + m1*x + m2*z*x + v
>
> You also need the main effect of z in the equation:
>
> Y = m0 + m1*x + m2*z + m3*z*x + v
>
> m0 will be the intercept for group 0, m2 + m0 = intercept for group 1.
>
> >My question is how we can explain the case in which m2 is
> >insignificant? Can we still say x has signficant effect on Y only
> >given Z=1 as implied by the seperate OLS? If yes then is it better to
> >run seperate OLS  than single OLS w/interaction term given that the
> >former can identify which sample of population impose a significant
> >effect of x on y?
>
> You have to be careful about comparing significance of coefficients
> across groups.  A coefficient might be significant in one group but
> not the other mostly because one has a larger sample size than the
> other.  You shouldn't just say that the effect is significant in one
> group but not the other; a formal test of the difference across
> groups should be done.
>
>
> -------------------------------------------
> Richard Williams, Notre Dame Dept of Sociology
> OFFICE: (574)631-6668, (574)631-6463
> HOME:   (574)289-5227
> EMAIL:  Richard.A.Williams.5@ND.Edu
> WWW:    http://www.nd.edu/~rwilliam
>
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