Logit And Probit Models

Although for our grade example LPM, logit, and probit give qualitatively similar results, we will confine our attention to logit and probit models because of the problems with the LPM noted earlier. Between logit and probit, which model is preferable? In most applications the models are quite similar, the main difference being that the logistic distribution has slightly fatter tails, which can be seen from Figure 15.6. That is to say, the conditional probability Pi approaches zero or one at a slower rate in logit than in probit. This can be seen more clearly from Table 15.15. Therefore, there is no compelling reason to choose one over the other. In practice many researchers choose the logit model because of its comparative mathematical simplicity.

Was this article helpful?

0 0
Rules Of The Rich And Wealthy

Rules Of The Rich And Wealthy

Learning About The Rules Of The Rich And Wealthy Can Have Amazing Benefits For Your Life And Success. Discover the hidden rules and beat the rich at their own game. The general population has a love / hate kinship with riches. They resent those who have it, but spend their total lives attempting to get it for themselves. The reason an immense majority of individuals never accumulate a substantial savings is because they don't comprehend the nature of money or how it works.

Get My Free Ebook

Post a comment