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Marginal and Interaction Effects in Ordered Response Models

Debdulal Mallick

EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: In discrete choice models the marginal effect of a variable of interest that is interacted with another variable differs from the marginal effect of a variable that is not interacted with any variable. The magnitude of the interaction effect is also not equal to the marginal effect of the interaction term. I present consistent estimators of both marginal and interaction effects in ordered response models. This procedure is general and can easily be extended to other discrete choice models. I also provide an example using household survey data on food security in Bangladesh. Results show that marginal effects of interaction terms are estimated by standard statistical software (STATA® 10) with very large error and even with wrong sign.

Keywords: Marginal effect; interaction effect; ordered probit; discrete choice. (search for similar items in EconPapers)
JEL-codes: C12 C25 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2009
New Economics Papers: this item is included in nep-dcm and nep-ecm
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Marginal and interaction effects in ordered response models (2008)
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