class9-642-08

class9-642-08 - Econ 642, Monday April 21, class 9 Econ...

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Econ 642, Monday April 21, class 9 Econ 642, Monday April 21, class 9 Robert de Jong 1 1 Department of Economics Ohio State University Robert de Jong Econ 642, Monday April 21, class 9
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Econ 642, Monday April 21, class 9 Chapter 17 Outline 1 Econ 642, Monday April 21, class 9 Chapter 17 Robert de Jong Econ 642, Monday April 21, class 9
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Econ 642, Monday April 21, class 9 Chapter 17 Logit and probit models for binary response Examples binary response: 1 Individual i owns car, or not 2 Individual i decides to go to college, or not 3 Country i is a democracy, or not 4 Individual has extramarital affair, or not Typical coding is 0-1; but this has no real meaning Robert de Jong Econ 642, Monday April 21, class 9
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Econ 642, Monday April 21, class 9 Chapter 17 Logit and probit models for binary response Models for the case where y i takes on the values 0 and 1 Ignoring the 0-1 character of y i : Linear probability model Disadvantages 1 Probabilities can end up less than 0 or exceeding 1 2 Partial effect constant Robert de Jong Econ 642, Monday April 21, class 9
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class9-642-08 - Econ 642, Monday April 21, class 9 Econ...

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