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

Drichoutis, Andreas (2011): Interpreting interaction terms in linear and non-linear models: A cautionary tale.

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Abstract

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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  • Interpreting interaction terms in linear and non-linear models: A cautionary tale. (deposited 09. Sep 2011 10:40) [Currently Displayed]
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