What are the problems associated with running a dichotomous variable in the OLS regression model?
One of the problems with using an OLS regression model on binary dependent variables, then, is that it may lead to predicted probabilities of the dependent variable that lie outside the limiting values of 0 and 1.0. Linear probability model assumes that the relationship between the independent variable and the probability of the dependent variable is linear across all possible values of the independent variable.
It is another problem with the linear probability model. One of the assumptions of the ordinary least-squares model is that the error term is normally distributed and independent of the x (independent) variable.
Because the error terms in a linear probability model do not have constant variance, the errors are said to be heteroscedastic, in violation of the OLS assumption of homoscedasticity. As a consequence of heteroscedasticity, hypothesis tests about estimated parameters such as the regression coefficient b may be incorrect.
One of the problems with using an OLS regression model on binary dependent variables, then, is that it may lead to predicted probabilities of the dependent variable that lie outside the limiting values of 0 and 1.0. Linear probability model assumes that the relationship between the independent variable and the probability of the dependent variable is linear across all possible values of the independent variable.
It is another problem with the linear probability model. One of the assumptions of the ordinary least-squares model is that the error term is normally distributed and independent of the x (independent) variable.
Because the error terms in a linear probability model do not have constant variance, the errors are said to be heteroscedastic, in violation of the OLS assumption of homoscedasticity. As a consequence of heteroscedasticity, hypothesis tests about estimated parameters such as the regression coefficient b may be incorrect.
You might also like to view...
Larceny includes all of the following except ______.
a. embezellment b. shoplifting c. robbery d. homicide
Answer the following statement(s) true (T) or false (F)
1. Police departments have written policies and procedures that cover most aspects of their operation. 2. Decisions made by organizational supervisors should be strictly based on accomplishing the goals of the organization. 3. Selection and promotion decisions should be based on subjective criteria. 4. One potential drawback to using civil service examination results for the selection process is that it may hinder the ability of police department leaders to diversify their departments. 5. Some scholars argue that since the terrorist attacks of September 11, 2001, the police have become more military like and the military have become more police like. 1. Police departments operate as a monopoly, as citizens have only one option, to use the services of the agency, or not. 2. Because police departments operate as monopolies, they are able to operate without regard for citizen satisfaction. 3. The police are unique in that they are the only public agency that operates as a street-level bureaucracy. 4. Due to written policies and intensive supervision, there is very little opportunity for police discretion to be misused or abused. 5. “Street cops” and “management cops” do not necessarily have the same goals or priorities. 1. As policing is such an important public service, departmental budgets are sufficient to provide the required personnel, equipment and training. 2. The goals of police organizations are difficult to specify and even more difficult to achieve. 3. For the most part, police departments of similar size are structured similarly. 4. A Special Weapons and Tactics (SWAT) unit is an example of a specialized police unit. 5. Smaller police departments tend to be more racially diverse than larger ones.
After the defense rests its case, the prosecution has an opportunity for ________.
A. surrebuttal B. cross-examination C. re-cross-examination D. rebuttal
In 2006, what percentage of all murders was committed by juveniles?
a. 5% of total murders b. 10% of total murders c. 20% of total murders d. 25% of total murders