Re: st: Intepretation of interaction terms

[lreine ycenna <lreine.ycenna@gmail.com>]

OK
It's probably a better idea after all.
Thanks.

On 24 May 2011 08:41, Maarten Buis <maartenlbuis@gmail.com> wrote:
> On Tue, May 24, 2011 at 9:15 AM, lreine ycenna <lreine.ycenna@gmail.com> wrote:
>> In fact,
>> another similar question:
>>
>> y = a + b + a x b
>>
>> I want to test this equation for group1 (dummy G1 ==1), while a , b, y
>> are numeric.
>>
>> In Stata, it would be:
>>
>> regress y a b axb G1 axG1 bxG1 axbxG1
>>
>> we must include G1 individually in the equation.
>
> That is not necessarily true, it just depends on what you want.
>
>> Also, we need to add up the coef of G1 to get the true effect for this group.
>
> That is also not necessarily true.
>
>> My question is, since G1 is a dummy, how should we interprete G1? i.e.
>> what does the coefficient for G1 mean to Y (GDP)?
>
> That depends on how you set up your model and how you choose to
> interpret your results. Typically with interaction effects there are
> multiple interpretations possible.
>
> You seem to be looking for a "cook book recipe" for doing interaction
> effects, and no such thing exists. Typically there multiple ways of
> correctly estimating the same model  (and many more ways to do it
> incorrectly). The only way of doing this right is to understand the
> logic and derive the model yourself. Deriving once own model sounds
> hard, but it is not. The only hard part is not making mistakes (it is
> easy to forget a minus sign or misplace a bracket), but that is just a
> matter of concentration.
>
> Even though I say it is easy, it is probably best learned by doing
> this a couple of times with someone who can give you face to face feed
> back while you are doing this. I suggest you find someone in your
> institution who can spare you an hour or so, and lets you go through
> successively more difficult examples till you get to your actual model
> of interest.
>
> Hope this helps,
> Maarten
>
> --------------------------
> Maarten L. Buis
> Institut fuer Soziologie
> Universitaet Tuebingen
> Wilhelmstrasse 36
> 72074 Tuebingen
> Germany
>
>
> http://www.maartenbuis.nl
> --------------------------
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