2.6. Estimation of the Logit Model: General Principles

Now that we have a model for dichotomous dependent variables, the next step is to use sample data to estimate the coefficients. How that’s done depends on the type of data you’re working with. If you have grouped data, there are three readily available methods: ordinary least squares, weighted least squares, and maximum likelihood.

Grouped data occurs when the explanatory variables are all categorical and the data is arrayed in the form of a contingency table. We’ll see several examples of grouped data in Chapter 4. Grouped data can also occur when data is collected from naturally occurring groups. For example, suppose that the units of analysis are business firms and the dependent variable ...

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