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  5. Binary Response Models: Logits, Probits and Semiparametrics

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Binary Response Models: Logits, Probits and Semiparametrics

  • Joel L. Horowitz
  • N. E. Savin
Journal of Economic Perspectives
vol. 15, no. 4, Fall 2001
(pp. 43–56)
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Abstract

A binary-response model is a mean-regression model in which the dependent variable takes only the values zero and one. This paper describes and illustrates the estimation of logit and probit binary-response models. The linear probability model is also discussed. Reasons for not using this model in applied research are explained and illustrated with data. Semiparametric and nonparametric models are also described. In contrast to logit and probit models, semi- and nonparametric models avoid the restrictive and unrealistic assumption that the analyst knows the functional form of the relation between the dependent variable and the explanatory variables.

Citation

Horowitz, Joel, L., and N. E. Savin. 2001. "Binary Response Models: Logits, Probits and Semiparametrics." Journal of Economic Perspectives, 15 (4): 43–56. DOI: 10.1257/jep.15.4.43

JEL Classification

  • C25 Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors
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