On Interaction Effects: The Case of Heckit and Two-Part Models
-
Manuel Frondel
and
Colin Vance
Summary
Interaction effects capture the impact of one explanatory variable on the marginal effect of another explanatory variable. To explore interaction effects, so-called interaction terms are typically included in estimation specifications. While in linear models the effect of a marginal change in the interaction term is equal to the interaction effect, this equality generally does not hold in non-linear specifications (Ai/Norton 2003). This paper provides for a general derivation of interaction effects in both linear and non-linear models and calculates the formulae of the interaction effects resulting from Heckman’s sample selection model as well as the Two- Part Model, two regression models commonly applied to data with a large fraction of either missing or zero values in the dependent variable. Drawing on a survey of automobile use from Germany, we argue that while it is important to test for the significance of interaction effects, their size conveys limited substantive content. More meaningful, and also more easy to grasp, are the conditional marginal effects pertaining to two variables that are assumed to interact.
© 2013 by Lucius & Lucius, Stuttgart
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- Inhalt / Contents
- Editorial Announcement
- Abhandlungen / Original Papers
- Multivariate Self-Exciting Threshold Autoregressive Modeling by Genetic Algorithms
- On Interaction Effects: The Case of Heckit and Two-Part Models
- Schumpeter, Marshall, and Neo-Schumpeterian Evolutionary Economics
- Ökonometrie vs. Projektdesign: Lehren aus der Evaluation eines Modellprojekts zur Umsetzung des Workfare-Konzepts
- Literaturüberblick / Literature Overview
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- Buchbesprechungen / Book Reviews
Articles in the same Issue
- Inhalt / Contents
- Editorial Announcement
- Abhandlungen / Original Papers
- Multivariate Self-Exciting Threshold Autoregressive Modeling by Genetic Algorithms
- On Interaction Effects: The Case of Heckit and Two-Part Models
- Schumpeter, Marshall, and Neo-Schumpeterian Evolutionary Economics
- Ökonometrie vs. Projektdesign: Lehren aus der Evaluation eines Modellprojekts zur Umsetzung des Workfare-Konzepts
- Literaturüberblick / Literature Overview
- Labor Market Effects of Trade and FDI – Recent Advances and Research Gaps
- Buchbesprechungen / Book Reviews
