Re: st: marginal effect of the interaction term in the probit model using margins command

[Maarten Buis <maartenlbuis@gmail.com>]

On Thu, Jun 30, 2011 at 10:54 AM, Ridhima Gupta wrote:
> I calculated the marginal effect on the interaction term using the
> inteff command. My understanding is that the output reports the mean
> interaction effect i.e. it reports the interaction effect when all
> variables are held at the mean.

No, -inteff- will compute a separate interaction effect for each
observation. So if you have a 1000 observations, you'll end up with a
1000 interaction effects. If you look at the output (a graph) you'll
see that the interaction effects varies a lot, from significantly
positive, to non-significant, to significantly negative. As a
consequence it makes no sense to try to summarize it with one number.
If you want to report marginal effects and you want to report the
marginal effect of the interaction term than your only choice is to
show the graph produced by -inteff-.

An alternative is to go for a logit model and report odds ratios. In
that case you will have one effect (a ratio of odds ratios) for your
interaction term, which makes it a lot easier to interpret and to
report in a table. Downside is that you need to make sure that your
audience/readers understand what an odds, an odds ratio, and a ratio
of odds ratios mean. This is however not as hard as many people
believe/fear. For an example that shows how that can be done see: M.L.
Buis (2010) "Stata tip 87: Interpretation of interactions in
non-linear models", The Stata Journal, 10(2), pp. 305-308..

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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