1. GRA 6020 Multivariate Statistics Probit and Logit Models Ulf H. Olsson Professor of Statistics

2. Ulf H. Olsson Binary Response Models The Goal is to estimate the parameters

3. Ulf H. Olsson The Logit Model The Logistic Function

4. Ulf H. Olsson The Probit Model

5. Ulf H. Olsson The Logistic Curve G (The Cumulative Normal Distribution)

6. Ulf H. Olsson The Latent Variable Model

7. Ulf H. Olsson The Latent Variable Model

8. Ulf H. Olsson Binary Response Models The magnitude of each effect is not especially useful since y* rarely has a well-defined unit of measurement. But, it is possible to find the partial effects on the probabilities by partial derivatives. We are interested in significance and directions (positive or negative) To find the partial effects of roughly continuous variables on the response probability:

9. Ulf H. Olsson Binary Response Models The partial effecs will always have the same sign as