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From |
Francesco Saverio Stentella Lopes <[email protected]> |

To |
[email protected] |

Subject |
st: interactions and economic significance in logit regression |

Date |
Fri, 08 Nov 2013 14:21:26 +0100 |

Coefficient |Marginal effect x1 | -0.03557 |-0.00283 x2 | -0.15448***|-0.01229*** x3 | -0.01690 |-0.00134 x4 | 0.07181** | 0.00571** x5 | -0.00470 |-0.00037 x6 | 0.06316* | 0.00503* x2*x3| -0.03970 |-0.00340 x2*x4| -0.00257 |-0.00092 x2*x5| -0.08700** |-0.00771** x2*x6| 0.06842** | 0.00548* Dear Statalist, The above table reports results from a logit model in which the dependent variable is a dummy variable. All the regressors are continuous variables. The model also includes the interactions between the x2 and x3,x4,x5,x6. All independent variables have been standardized. We are interested in the moderator role of each one of the interacted x (x3 x4 x5 and x6) on the relationship between x2 and our dependent variable (y). We report both logit coefficients and marginal effects estimated holding other variables at the mean values. For interaction terms, we follow the procedure suggested by Norton et al. (2004), in order to calculate the corrected interaction effect (the value reported in the table is the mean interaction effect and its level of statistical significance). We are interested in estimating the economic significance of our results. Namely we want to understand how x3 x4 x5 and x6 (one by one) impact on the link between x2 and our dependent variable. For example, focusing on control (x5), we would interpret our results as such: 1) A decrease of 1 standard deviation in x2, irrespective the level of the

i.e. the estimated margin for x2; 2) Holding constant x2, an increase of one standard deviation in x5 would

. However, the effect is not statistically significant and we do not discuss it; 3)The effect of a decrease of 1 standard deviation in x2 is reinforced by a contemporaneous increase of 1 standard deviation in x5 (given that the mean interaction effect has the same sign of the coefficient of x2). The economic effect on the probability of y becomes (-0.01229-0.00771)=-0.02000, so that the probability of y would increase of about 2 percentage points. Is the third step correct? Can I simply add the marginal effect calculated by the margin command (i.e the marginal effect calculated for x1...x6) with the marginal effect calculated using inteff (i.e the marginal effect calculated for x2*x3...x2*x6) in order to obtain the economic significance of our results? Many thanks for the precious help Francesco Reference

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