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# RE: st: Calculating margins after biprobit

 From "Wakeman, Simon" To "statalist@hsphsun2.harvard.edu" Subject RE: st: Calculating margins after biprobit Date Tue, 6 Dec 2011 17:47:43 +0000

```Thanks both for your comments.

Tirthankar Chakravarty: I am not clear as to what is your criticism of the way I have estimated the binary outcome. Unfortunately I do not have the 2nd edition of Wooldridge's text (only the first) but from what I can gather from your example the difference is that you include Z on the RHS of both first and second equations (which is actually what I had done - I had just mistakenly omitted it). Please can you confirm.

I am interested in precisely the marginal/partial effect you mention (P[Y1i=1|Y2i=1, Zi] - P[Y1i=1|Y2i=0, Zi]) so this is very helpful.

urbain thierry YOGO: I still get the error message when I try the command you suggested. I can overcome this by adding "force" to the options, but it does not solve the issue of whether I have a potential problem.

Simon

-----Original Message-----
From: owner-statalist@hsphsun2.harvard.edu [mailto:owner-statalist@hsphsun2.harvard.edu] On Behalf Of Tirthankar Chakravarty
Sent: Tuesday, December 06, 2011 12:10 PM
To: statalist@hsphsun2.harvard.edu
Subject: Re: st: Calculating margins after biprobit

1) The way that you have estimated the binary outcome with binary endogenous variables model using -biprobit- is not correct. Here is a replication of an example in Wooldridge, "Econometric Analysis of Cross-Section and Panel Data", 2nd ed., 2010, MIT Press, to be found in table 15.2, pg. 598:

*********************************************************************************
use http://fmwww.bc.edu/ec-p/data/wooldridge2k/LABSUP, clear biprobit (worked=nonmomi educ c.age##c.age black hispan morekids) ///
(morekids=nonmomi educ c.age##c.age black hispan samesex)
*********************************************************************************

Here "morekids" is the binary endogenous variable and "worked" is the binary outcome. Note how the model is entered in Stata. The coefficient on the binary endogenous variable is -0.703, as reported in the text.

2) It is important to be sure what you mean by marginal/partial effects in this context. One such quantity of interest, which can be called partial effect of a change in the binary endogenous variable, for an individual would be:

P[Y1i=1|Y2i=1, Zi] - P[Y1i=1|Y2i=0, Zi]

where Y1 is the binary outcome and Y2 is the binary endogenous variable; Z are all the exogenous variables in the system. This can be constructed in Stata as the nonlinear prediction:

***********************************
predictnl probch = predict(pcond1) - ///
predict(p10)/(1-predict(pmarg2))
***********************************

after the estimation above. The sample average of this quantity (use
-summ-) is the average partial effect, where partial effect is defined as above. Other "partial effects" of interest can be defined.

Please see section 15.7.3 in Prof. Woodridge's book for an excellent discussion of these issues.

T

On Mon, Dec 5, 2011 at 12:37 PM, urbain thierry YOGO <yogout@gmail.com> wrote:
> Try the following command
> margins, dydx(_all) post
> this is equivalent to  mfx compute, predict(p11) with
> (p11)=(depvar1=1, depvar2=1) however a simple and general way is the
> following
>
> The marginal effects for, Pr(depvar1=1, depvar2=1), are mfx compute,
> predict(p11) The marginal effects for Pr(depvar1=1, depvar2=0) are mfx
> compute, predict(p10) The marginal effects for Pr(depvar1=0,
> depvar2=1) are mfx compute, predict(p01) The marginal effects for
> Pr(depvar1=0, depvar2=0) are mfx compute, predict(p00)
>
>
>
> 2011/12/5, Wakeman, Simon <Simon.Wakeman@esmt.org>:
>> I am investigating the effect of a binary variable X on a binary variable Y,
>> where X is potentially endogenous. I estimated a biprobit:
>>  biprobit (Y = X ) (X = Z).
>>
>> However, when I use the following margins command
>>  margins, dydx(X) over(X)
>> I get the error message:
>> "default prediction is a function of possibly stochastic quantities other
>> than e(b)"
>>
>> I also tried mfx but it does not seem to produce a marginal effect for X.
>>
>> I would much appreciate if anyone can tell me how to obtain the marginal
>> effect of X on Y.
>>
>>
>> Simon
>>
>>
>> *
>> *   For searches and help try:
>> *   http://www.stata.com/help.cgi?search
>> *   http://www.stata.com/support/statalist/faq
>> *   http://www.ats.ucla.edu/stat/stata/
>>
>
>
> --
> *Urbain Thierry YOGO
> P.h.D candidate in Economics*
> *
> *   For searches and help try:
> *   http://www.stata.com/help.cgi?search
> *   http://www.stata.com/support/statalist/faq
> *   http://www.ats.ucla.edu/stat/stata/

--
Tirthankar Chakravarty
tchakravarty@ucsd.edu
tirthankar.chakravarty@gmail.com

*
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```