Simplified Marginal Effects in Discrete Choice Models

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Date

Nov. 30, 2003

Authors

Soren Anderson and Richard G. Newell

Publication

Working Paper

Reading time

1 minute

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.

Authors

Soren Anderson

Richard G. Newell

President and CEO, Resources for the Future

Dr. Richard G. Newell is the President and CEO of Resources for the Future. From 2009 to 2011, he served as the administrator of the US Energy Information Administration, the agency responsible for official US government energy statistics and analysis.

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