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Marginal Effects Continuous Variables

Marginal Effects for Continuous Variables Page 1 Marginal Effects for Continuous Variables Richard Williams, University of Notre Dame, ~rwilliam/ Last revised January 25, 2021 References: Long 1997, Long and Freese 2003 & 2006 & 2014, Cameron & Trivedi s Microeconomics Using Stata Revised Edition, 2010 Overview. Marginal Effects are computed differently for discrete ( categorical ) and Continuous Variables . This handout will explain the difference between the two. I personally find Marginal Effects for Continuous Variables much less useful and harder to interpret than Marginal Effects for discrete Variables but others may feel differently.

Categorical variables, such as psi, can only take on two values, 0 and 1. It wouldn’t make much sense to compute how P(Y=1) would change if, say, psi changed from 0 to .6, because that cannot happen. The MEM for categorical variables therefore shows how P(Y=1) changes as the categorical variable changes from 0 to 1, holding all

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