Marginal Effects

Подпись: dE (sales) dadvert Подпись: e3 + 2^4 advert Подпись: (5.7)

When variables interact, the marginal effect of one variable on the mean of another has to be computed manually based on calculus. Taking the partial derivative of average sales with respect to advertising yields produces the marginal effect on average sales of an increase in advertising;

The magnitude of the marginal effect depends on the parameters as well as on the level of adver­tising. In the example marginal effect is evaluated at two points, advert=.5 and advert=2. The code is:

1 scalar me1 = $coeff(advert)+2*(0.5)*$coeff(a2)

2 scalar me2 = $coeff(advert)+2*2*$coeff(a2)

3 printf "nThe marginal effect at $500 (advert=.5) is

4 %.3f and at $2000 (advert=2) is %.3fn",me1,me2 and the result is:

The marginal effect at $500 (advert=.5) is 9.383 and at $2000 (advert=2) is 1.079

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