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# Re: st: RE: problem with factor variable and margins.

 From Rich Steinberg To statalist@hsphsun2.harvard.edu Subject Re: st: RE: problem with factor variable and margins. Date Wed, 17 Mar 2010 14:19:01 -0400

Thanks for the thoughtful response. But a) margins should be robust, able to use variables created other ways. If for no other reason than that stata 11should be helpful to those who use code that worked fine in stata 10.b) I have to confess that under multiple deadlines, I did not read the full documentation on interactions with the new margins command. I figured it was mostly about interacting one unrelated variable with another. But my two variables are related. Nainc is a dummy variable equalling one if asset income is negative. I am estimating a relationship between asset income and donations that is discontinuous at zero -- one limiting point (left intercept???) for the segment <0, another value at zero, and a third limiting point (right intercept???) for the segment >0, because this allows me to capture some unobservable heterogeneity as well as generalizing the functional form. So nainc_ainc is 0 for all nonnegative asset income levels and equal to asset income for all negative levels. Should I be reading the full discussion of interactions in margins predict for this?
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Philip Ender wrote:
```
```Rich wrote:

```
```I think I have tracked down the problem. In addition to the factor variable nainc, I have a continuous variable nainc_ainc as a regressor (which is the >indicator times a continuous variable). The margins command then got confused and assumed that nainc was an abbreviation for nainc_ainc, which did >appear in the results and subsequent tests. When I rename nainc_ainc as n2ainc_ainc, my problem goes away -- a marginal effect for the discrete >change in the factor variable nainc does indeed show up in the results.

If I am right in diagnosing why the rename solves the problem, this means there is a bug in stata's margins. It is not reporting an ambiguous >abbreviation, it is simply picking one. Should I report it to stata's tech staff, or is that something you do, Martin?
```
```
I don't think the problem is with -margins- but with the fact that you
created the interaction outside of your model.  If you create the
interaction using the factor variables in the model then -margins- not
only identifies all of the terms but produces marginal effects that
take into account the interactions.  Without reproducing you entire
model, it would look something like this:

. tobit dv i.naic c.ainc  i.naic#c.ainc ...

Phil
```
```
--
Rich Steinberg
Department of Economics, 516 Cavanaugh Hall
IUPUI
Indianapolis, IN 46202-5140
317-278-7221