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Subject |
st: From probit to dprobit to interpretation |

Date |
Fri, 11 Jan 2008 13:52:10 +0100 |

I have a general question about how to interpret and use probabilities from a probit model I have esimated in Stata. I have estimated a probit model where n=1000 000 customers with only 1 independent dummy variable (x) (for the sake of clarity), and get the following estimated coefficients: y_pred=-2.33-0.431*x (x being significant) No the way I understand this is that these coefficients, except for the signs and significance level, is hard to interpret. Thus, I can derive it as a probability model, and then again calculate probabilities from any table with standard cumulative normal distribution values. Turning on and off x will give me the discrete change, thus Turning off the effect of X thus gives me: y_pred=-2.33-(0.431*0) and Pr(z<2.33)=0.99% Tuning on the effect y_pred=-2.33-(0.431*1)=-2.761 and Pr(z<2.761)=0.29% The difference between these probabilities is the discrete change, and this change can be directly estimated using a dprobit model in Stata? Discrete change=0.99-0.29=-0.7% Most textbooks stops here, and I think that so far I am on the right track - but I want to interpret this probability in terms of what this x induced effect means in terms of my sample... In this particular model my sample is 1000000, and x=1 is a membership program of which there are 500000 members. Would it be correct to assume that the discrete change estimated above in terms of customers could be interpreted as following: Turning of the effect of X: 0.99%*1000000=9900 Turning on the effect of X: 0.29%*1000000=2900 Then, the way I have understood this: Discrete change, reduction induced by x=9900-2900=7000? Any help would be greatly appreciated. Best wishes, Alexander Severinsen * * For searches and help try: * http://www.stata.com/support/faqs/res/findit.html * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

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