Simplified Marginal Effects in Discrete Choice Models

Richard Newell and Soren Anderson

RFF Working Paper Series from Resources for the Future

Abstract: We show that after a simple normalization of explanatory variables so that they equal zero at some desired reference point, marginal effects for continuous variables in probit and logit models simplify dramatically, becoming a function of only the estimated constant term. We present similar simplifications for computation of the asymptotic variance of marginal effects, as well as for the effects of dummy variables on predicted probabilities. We provide a simple table, which in combination with raw probit or logit estimates, is all one needs to compute the desired effects.

Keywords: logit; probit; discrete choice; binary choice; marginal effect; data normalization (search for similar items in EconPapers)
JEL-codes: C25 C51 C81 (search for similar items in EconPapers)
Date: 2003-12-01
New Economics Papers: this item is included in nep-dcm
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Citations: View citations in EconPapers (26)

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Related works:
Journal Article: Simplified marginal effects in discrete choice models (2003)
Working Paper: Simplified Marginal Effects in Discrete Choice Models (2003)
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