Interpreting the Outcomes of Two-Part Models
Interaction effects capture the impact of one explanatory variablex1on the marginal effect of another explanatory variablex2. To explore interaction effects, so-called interaction termsx1x2are typically included in estimation specifications. While in linear models the effect of a marginal change in the interaction term is equal to the interaction effect, this equality generally does not hold in non-linear specifications (AI, NORTON, 2003). This paper provides for a general derivation of marginal and interaction effects in both linear and non-linear models and calculates the formulae of the marginal and interaction effects resulting from the Two-Part Model, a commonly employed censored regression model. Drawing on a survey of automobile use from Germany, we illustrate several subtleties inherent to the substantive interpretation of interaction effects gleaned from non-linear models.
Frondel, M. und C. Vance Ph.D. (2012), Interpreting the Outcomes of Two-Part Models. Applied Economics Letters , 19, 10, 987-992