Binary Logit and Probit Models

SOC 586 Advanced Social Statistics

Ahmed and Yang
When to use binary logit / probit
models?

1.When the response variable has two categories: yes/no,

happen/not happen. For example, being pregnant or not, vote T
or not.

2.And when we want to model the probability of the occurrence/

nonoccurrence of those events.
An important equation before we move
forward...
Logit Model: Link Function
Logit Model: Equation
Interpreting LM: Statistical Significance

To test the statistical significance of a logit model, chi-squared

distribution (more specifically likelihood ratio statistic) is used
(instead of F test in classical regression model).
Interpreting LM: Marginal Effect on or
Transformed

E(Bk ) indicates the effect of Xk on the other left side of the equation:
the odds.
 Interpreting ML: Odds and Odds Ratio
Odds and probability are not the same thing:

Odds = probability/1-probability

Odds ratio = O1/O2

O1/O2 = 1/(O1/O2)
 Interpreting ML: Odds
In the example from Chapter 3:
Interpreting ML: Odds

The odds of white males = 0.321

Interpretation:

There are 321 white male adolescents who have had interecourse for each 1000
white male adolescents who have not.
Interpreting ML: Odds Ratio

Owhite/Oblack = 0.244/0.864 = 0.282

Interpretation:
the odds for whites to have had intercourse are 0.282 times as high as the odds for blacks to have had intercourse

OR

Oblack/Owhite = 0.864/0.244 = 3.541

Interpretation:
the odds for blacks to have had intercourse are as high as 3.541 times the odds for whites.
Interpreting ML: Odds Ratio

If Odds ratio > 1, it indicates an increased chance of an event occurring versus not

If Odds ratio < 1, it indicates a decreased chance of an event occurring versus not

Note that: O1/O2 = 1/(O1/O2)

Finally, How to get odds ratio from logit model table?

Raising e to the power of B (coefficient):

Odds Ratio = eb
Interpreting ML: Odds Ratio
Interpreting ML: Predicted Probabilities
Interpreting ML: Predicted Probabilities
Interpreting ML: Predicted Probabilities
Interpreting ML: Predicted Probabilities

The calculated probability for white female = 0.146

Interpretation:

%14.6 of white female adolescents are predicted to have had intercourse.

Interpreting ML: Additional Example

A binary logit analysis reveals that three variables significantly influence congestion-
avoiding travel behaviour, namely higher vehicle occupancy, a relatively large
number of previous visits to the area and prioritising congestion avoidance in pre-
trip planning.

1) One increase in vehicle occupancy (ordinal) the odds of taking evasive relative to non- evasive behaviour
increased by 1.61.
Interpreting ML: Additional Example
Interpreting ML: Additional Example

2) Respondents with at least five previous visits are approximately 2.5 times more
likely than those with fewer previous visits to adopt evasive, in preference to non-
evasive, travel behavior.

3) Respondents with this priority are about three times more likely than those without
this priority to take evasive rather than non-evasive behaviour
Probit Model

In probit model, the link function is:

Probit Model

Maybe we can just remember:

Then,
Probit Model: Interpretation (1)

1.Predicted probabilities given a

set of values in the explanatory
1 variables
1
(have calculator or Z score table
1 handy)
Probit Model: Interpretation (2)

2. Marginal Effect on the

probability of an event (it can be
tricky, cuz not intuitive)
Logit or Probit models?

1.In most applications, the

two models give
identical substantive
conclusions.

2. With an extremely large

number of observations, logit
models are more appropriate
for distributions with heavier
tails.
Linear, logit, and probit models link
functions

Linear

Logit

Probit