Re: st: biprobit, interactions, and correct marginal effects

[Richard Williams <richardwilliams.ndu@gmail.com>]

You may wish to look at

http://www.stata.com/statalist/archive/2013-01/msg00263.html

http://www.stata.com/statalist/archive/2013-01/msg00293.html

There were several other related posts around 
January 6 to January 9 2013. Those posts explain 
why Stata does not give you a marginal effect for 
an interaction term and suggest some alternatives 
that may make more sense anyway.


At 05:39 PM 5/24/2013, Dimitriy V. Masterov wrote:
> I would like to calculate the correct marginal effect of an
> interaction after a bivariate probit. It is the interaction of the
> endogenous binary variable and a continuous exogenous variable.
>
> Here's an example where the outcome is a child attending private
> school. I am interested in whether voting for the property tax
> increase and the property tax paid make private education more likely:
>
> #delimit;
> webuse school;
> biprobit
> (private = c.years c.logptax##i.vote)
> (vote = year c.loginc c.logptax), robust;
>
> I would like to get the AME of just vote#c.logptax. The index function
> coefficient for that term is 0.72.
>
> Is there a way to get margins to report this? I don't think this code
>
> margins, dydx(logptax) predict(pmarg1) over(vote) force;
>
> does it because it also included the non-interaction effect of
> logptax. Tricking Stata by defining the interaction manually will not
> produce the correct AME for reasons described in Ai and Norton (2003).
>
> Any advice would be much appreciated.
>
> Ai, C., and E. Norton. 2003. Interaction terms in logit and probit models.
> Economics Letters, 80: 123­129
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-------------------------------------------
Richard Williams, Notre Dame Dept of Sociology
OFFICE: (574)631-6668, (574)631-6463
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EMAIL:  Richard.A.Williams.5@ND.Edu
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