Interpreting interaction terms in linear and non-linear models: A cautionary tale

Interaction terms are often misinterpreted in the empirical economics literature by assuming that the coefficient of interest represents unconditional marginal changes. I present the correct way to estimate conditional marginal changes in a series of non-linear models including (ordered) logit/probit regressions, censored and truncated regressions. The linear regression model is used as the benchmark case.

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Year of publication:	2011-07
Authors:	Drichoutis, Andreas
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	interaction terms \| ordered probit \| ordered logit \| truncated regression \| censored regression \| nonlinear models

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	C51 - Model Construction and Estimation ; C12 - Hypothesis Testing ; C24 - Truncated and Censored Models ; C25 - Discrete Regression and Qualitative Choice Models
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009294598