Re: st: Re: Why main effects are significant but interction term is not signficant

[Ulrich Kohler <kohler@wzb.eu>]

Am Dienstag, den 08.03.2011, 02:22 -1000 schrieb Mike:
> y= beta+beta1*x1+beta2*x2+beta3*x1*x2+epsilon
> 
> You can think of y as income, x1 is gender (1 for male) and x2 is the
> educational level.
> 
>  The OLS gives a significant results for beta1 and beta2 but not
> beta3. In the context of the example, male and higher education help
> having higher income. But the interaction of male and higher education
> doesn't have any significant effect on income. Can you provide some
> insights?

"The effect of education on income for men is not significantly
different from the effect of education on income for women."

and/or

"The effect of gender on income for higher educated person is not
significantly different from the effect of gender on income for the
lower educated."


BTW, if this example were the result of an application with a German
data set, I would distrust the result, because the returns from
education tend to be higher for men than for women.

Uli


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