Dear all,
I have run a Probit model and calculated the marginal effects afterwards.
Assuming a continuous RHS variable, the marginal effect is interpreted the
following way: "An infinitesimal change in the RHS variable changes the
probability that the endogenous variable takes the value of one by X%".
Are these X% (1) percent points or (2) percent of the actual value?
Example:
Pr(Y=1) = 0.5
Marginal Effect of x on y = 0.1
(1) Does it mean Pr(Y=1) changes to 0.6 (0.5+0.1)
(2) or does it mean Pr(Y=1) changes to 0.55 (0.5*1.1)
Thanks a lot for a brief response!
Sophie
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