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Suppose Y is a dichotomous dependent variable, and the data-generating process for Y can be expressed as: Yi=0.1+0.03X1i−0.02X2i+Ui, Interpret the coefficients on X1 and X2

Sagot :

The coefficient of x1 = 0.03 and the coefficient of  x2 = - 0.02.

The coefficient of x1 is  positive we can say there is a positive relationship  between x1 and y as the x1  value increases, the y value also increases

If the x1 value increases as 1 unit then the y  value increases as 0.03 unit while x2 keeps constant.

The coefficient of x2 is negative we can say there is a negative relationship between x2 and y as the x2 value increases y  value decreases.

If the x2 value increases as 1 unit then the y value decreases as 0.02 unit while x1 keeps constant.

A dichotomous variable is one that takes on one of just two potential qualities when noticed or estimated. The worth is most frequently a portrayal of a deliberate variable (e.g., mature: under 65/65 and over) or a quality (e.g., orientation: male/female).

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