P=

-10.00-

e 0 + 1 x 1 + e 0 + 1 x

right side is a linear equation for X. This is sometimes called the logit transformation of P. When the scale of the vertical axis of the plot is modified using the logit transformation, the following straight-line plot results.

Li =

p 1 p = o + 1 x1 +

This formula can be re arrange so that it is linear in Xs as follows

In the logit Model influence of Xs on Y is measured by the value of the slope of Xs which we have called B1 . The hypothesis that B1 =0 versus the alternative B1=B=0 is of interst since if B1 =0 X is not related to y In the logit model, the influence of X on Y is measured by the value of the slope of X which we have called1. The hypothesis that 1 = 0 versus the alternative that 1=B is of interest since if 1=, X is not related to Y. Under the alternative hypothesis that 1=B, the logit model becomes

They may be continuous, interval level (net worth of a company), they may be only positive or zero (percent of vote a party received) or they may be dichotomous (dummy) variable (1 = male, 0 = female). However Y can only take on 2 values, say, 0 and 1. If Y can only equal 0 or 1, From this we conclude that the right hand side of the regression equation must be interpreted as a probability, i.e. restricted to between 0 and 1. For example, if the predicted value for a case is .70, this means the case has a 70% chance of having a score of 1.
This shows that the odds ratio of and is directly related to the slope of the Logit Model. It also shows that the value of the odds ratio depends on the value of X. For a given value of X, testing that B is 0 is equivalent to testing is 1.

The multiple logistic regression model relates the probability distribution of Y to two or more covariates by the formula

where P is the probability that Y = 1 given the values of the covariates. It is a simple extension of the simple Logit model that was just presented placed on a single covariate.

PROBIT obtains estimates of the linear probit model, where the dependent variable takes on only two values. Options allow you to obtain and save the inverse Mills ratio as a series so that the sample selection correction due to Heckman can be estimated. You may have as many independent variables as you like subject to the overall limits on the number of arguments per statement and the amount of working space, as well as the number of data observations you have available. The observations over which the regression is computed are determined by the current sample. PROBIT also checks for complete or quasi-complete sample separation by one of the right hand side variables; such models are not identified. The list of independent variables on the Logit may include variables with explicit lags and leads as well as PDL (Polynomial Distributed Lag) variables. These distributed lag variables are a way to reduce the number of free coefficients when entering a large number of lagged variables in a model by imposing smoothness on the coefficients the PDL section for a description of how to specify such variables. The dependent variable need not be a strictly 0 or 1 variable. Positive values are treated as 1 and 0 or negative values are treated as 0. (Estrella, Arturo 1998)

Amemiya, Takeshi, "Qualitative Response Models: A Survey," Journal of Economic Literature 19, December 1981,pp. 1483-1536. Estrella, Arturo, A New Measure of Fit for Equations with Dichotomous Dependent Variables , Journal of Business and Economic Statistics, April 1998, pp.198-205. Maddala, G. S., Limited-dependent and Qualitative Variables in Econometrics , Cambridge University Press, New York, 1983, pp. 22-27, 221-223, 231-234, 257-259, 365.