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Re: st: Interpreting Fairlie decomposition results

From   Maarten buis <>
Subject   Re: st: Interpreting Fairlie decomposition results
Date   Tue, 20 Oct 2009 12:58:45 -0700 (PDT)

--- On Tue, 20/10/09, Stephan F Gohmann wrote:
> 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.

The concept of proportion of the total effect explained does
more harm than good. It is better to think in terms of direct,
indirect, and total effects. There is a variable X that 
directly influences another variable Y, but it also influences
another variable Z, which in turn also influences Y. So, X has
a direct effect on Y and an indirect effect, through Z, on Y.
The total effect is the sum of the direct and indirect effect.
There is no reason why the direct and indirect effects should
have the same sign, and opposite signs in no way indicate that
the model is in some way bad or lacks explaining power, it just
means that the total effect would have been bigger if the 
indirect effect did not exist. 

Hope this helps,

Maarten L. Buis
Institut fuer Soziologie
Universitaet Tuebingen
Wilhelmstrasse 36
72074 Tuebingen


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