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Random effects probit and logit: understanding predictions and marginal effects

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  • James R. Bland
  • Amanda C. Cook

Abstract

Random effects probit and logit are nonlinear models, so we need predicted probabilities and marginal effects to communicate the economic significance of results. In these calculations, how one treats the individual-specific error term matters. Should one (i) set them equal to zero or (ii) integrate them out? We argue that (ii) is the quantity that most readers would expect to see. We discuss these in the context of the statistical package Stata, which changed its default predictions from (i) to (ii) in version 14. In Appendix 5, we illustrate how to calculate predictions and marginal effects using method (ii) in Stata 13 and earlier.

Suggested Citation

  • James R. Bland & Amanda C. Cook, 2019. "Random effects probit and logit: understanding predictions and marginal effects," Applied Economics Letters, Taylor & Francis Journals, vol. 26(2), pages 116-123, January.
    • Handle: RePEc:taf:apeclt:v:26:y:2019:i:2:p:116-123
    DOI: 10.1080/13504851.2018.1441498
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    Cited by:

    1. Uwe Jirjahn & Thi Xuan Thu Le, 2024. "Political spillovers of workplace democracy in Germany," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 95(1), pages 5-31, March.
    2. Richard Kouamé Moussa, 2019. "Heteroskedasticity in One-Way Error Component Probit Models," Econometrics, MDPI, vol. 7(3), pages 1-22, August.
    3. Marissa M Rurka & J Jill Suitor & Megan Gilligan & Robert T Frase & Zhen Cong, 2023. "How Do Own and Siblings’ Genders Shape Caregivers’ Risk of Perceiving Care-Related Criticism From Siblings?," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 78(3), pages 520-531.
    4. Ian J. Rickard & Colin Vullioud & François Rousset & Erik Postma & Samuli Helle & Virpi Lummaa & Ritva Kylli & Jenni E. Pettay & Eivin Røskaft & Gine R. Skjærvø & Charlotte Störmer & Eckart Voland & D, 2022. "Mothers with higher twinning propensity had lower fertility in pre-industrial Europe," Nature Communications, Nature, vol. 13(1), pages 1-12, December.
    5. Elisé Wendlassida Miningou, 2022. "External debt, fiscal consolidation, and government expenditure on education," Cahiers de recherche 22-02, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.

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