Average marginal effects

The logistic response function is essentially nonlinear. Therefore, it is not immediately clear what is the effect of a unit change in the price ratio on the probability that a customer purchases Hoppiness. A solution is to interpret the effect of a unit change averaged over all customers.

This average marginal effect can be derived by using the function margins(). The function is loaded from the add-on package margins. Finally, you will compare the average marginal effect for price.ratio of the logistic.model to the price.ratio coefficient of the probability.model.

Load the add-on package margins by using the function library().
Obtain the price.ratio coefficient for the probability.model by using the function coef().
Obtain the marginal effect for price.ratio of the logistic.model by using the function margins().

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Exercise

Average marginal effects

Instructions