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Econometrics Academy - Ordered Probit and Logit Models
The ordered probit and logit models have a dependent variable that are ordered categories. Examples include rating systems (poor, fair, good excellent), opinion surveys from strongly disagree to strongly agree, grades, and bond ratings. Handouts, Programs, and Data Ordered Probit and Logit
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Use the data in LOANAPP for this exercise. The binary variable to be explained is approve, which is equal to one if a mortgage loan to an individual was approved. The key explanatory variable is white, a dummy variable equal to one if the applicant was white. The other applicants in the data set are black and Hispanic. To test for discrimination in the mortgage loan market, a linear probability model can be used: approve =β0 β1 white other factors. (i) If there is d
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