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st: Understanding how to use biprobit to control for endogenous dummy


From   Kevin Infante <kinfante@princeton.edu>
To   statalist@hsphsun2.harvard.edu
Subject   st: Understanding how to use biprobit to control for endogenous dummy
Date   Fri, 30 Mar 2012 00:13:11 -0400

Hello statalist,

I'm an undergraduate senior Economics major. I have a basic
understanding of econometrics
and a basic understanding of Stata. Unfortunately, the models I
apparently need to run demand a more in-depth understanding of both.
Here is one of my regressions:

y1=a*y2+b*w+u1   (1)
y2=c*z+d*w+u2     (2)

y1=dummy representing whether a respondent voted
y2= endogenous dummy representing whether a respondent lists Internet news as
their main news source
w=collection of demographic controls, as well as dummies for the year
and state of residence of the respondent
z= a collection of instrument variables
u1=error term of equation (1)
u2= error term of equation (2)

 From all I have read on this list, -biprobit- is the stata command
that is best suited to deal with an endogenous dummy variable in a
discrete choice model.

 I've run my models using biprobit, and successfully gotten output.
The first problem I have is I don't know how to interpret the output.
I gather that rho is important, but I don't know what rho is or what
it measures. The coefficient on rho is -.55, and the SE is .055. I'm
assuming the likelihood-ratio test of rho=0 is also important, which
indicates p>chi2=0.0000. I again have no idea what that means. Lastly,
I'm not sure what coefficients on the variables I should be looking
at.



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