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Re: st: Ordered Probit Interpretation

From   Richard Williams <>
Subject   Re: st: Ordered Probit Interpretation
Date   Fri, 26 Aug 2011 11:15:33 -0500

At 08:55 AM 8/26/2011, Venkiteshwaran, Vinod wrote:
I am running an ordered probit model with pooled cross-sectional data. The ordered dependent variable, Y_it has 7 categories that sometimes change within each i. THe variable of interest is X_it. In the results X_it enters the model with a highly significant negative coefficient implying that the marginal effect of a change in X_it is that it reduces(increases) the probability of the highest(lowest) category of Y_it.

I then transformed the Y_it variable into changes and ranked the changes, Y*_it. That is if the change is upward, downward or no change, where the order is 3,2 and 1 respectively. I re-run my ordered probit model with Y*_it as my dependent variable and the same X_it. In this model X_it no longer has a significant coefficient. Econometrically how should this insignificance be interpreted?

I am not sure why you are doing that, but in any event why would you consider Y*_it ordinal? If you want it to be ordinal, I would think you would want it to be upward, no change, downward. Or, use mprobit rather than oprobit.

Richard Williams, Notre Dame Dept of Sociology
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