Which of the following is a merit of using the probit/logit model over the linear probability model for a limited dependent variable?
A) By construction predictions from the model will fall within 0 and 1.
B) The marginal effects are easier to calculate.
C) The probit/logit model can be estimated using similar OLS.
D) The probit/logit model is better at finding causal estimates.

Question

Quizplus · Accepted Answer

By construction, the probit/logit model ensures that predictions will fall within the range of 0 and 1, whereas the linear probability model may produce predictions outside this range. This makes the probit/logit model more suitable for limited dependent variables such as binary outcomes. The other options are not necessarily advantages of probit/logit over linear probability.

Which of the Following Is a Merit of Using the Probit/logit