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st: Interpreting Fairlie decomposition results


From   Stephan F Gohmann <steve.gohmann@louisville.edu>
To   <statalist@hsphsun2.harvard.edu>
Subject   st: Interpreting Fairlie decomposition results
Date   Tue, 20 Oct 2009 12:20:05 -0400

I have used the Fairlie do file to decompose a logit model and I am not quite sure about how to interpret the signs on the total gap explained. If the gap has a value of say -0.130 and the total explained is 0.017, then should I interpret that as -13.24% of the gap is explained by the model. Likewise, if the gap is -.130 and the total explained is -0.092, then is the portion explained 70.23%. So overall, if the model fits well and the gap is negative, then the total explained should also be negative and when the gap is positive, then the total explained should be positive? And if the signs are opposite, then the model is not explaining the gap. Is this the correct interpretation? Thanks for your help.

Steve Gohmann



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