Use the data in LOANAPP.RAW for this exercise; see also Computer Exercise C7.8. (i) Estimate a probit
Question:
(i) Estimate a probit model of approve on white. Find the estimated probability of loan approval for both whites and nonwhites. How do these compare with the linear probability estimates?
(ii) Now, add the variables hrat, obrat, loanprc, unem, male, married, dep, sch, cosign, chist, pubrec, mortlatl, mortlat2, and vr to the probit model. Is there statistically significant evidence of discrimination against nonwhites?
(iii) Estimate the model from part (ii) by logit. Compare the coefficient on white to the probit estimate.
(iv) Use equation (17.17) to estimate the sizes of the discrimination effects for probit and logit.
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Introductory Econometrics A Modern Approach
ISBN: 978-0324660548
4th edition
Authors: Jeffrey M. Wooldridge
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