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City of South Bend Disoarity Study 2020 <br />by the amount of the coefficient. 170 However, in the probit model, the initial <br />coefficients cannot be interpreted this way. One additional step, which can be <br />computed easily by most statistical packages, must be undertaken in order to <br />yield a result that indicates how the change in the independent variable affects <br />the probability of an event (e.g., business formation) occurring. For instance, <br />using our previous example of the impact on gender on business formation, if <br />the independent variable was WOMAN (with a value of 0 if the individual was <br />male and 1 if the individual was female) and the final transformation of the <br />coefficient of WOMAN was -0.12, we would interpret this to mean that women <br />have a 12 percent lower probability of forming a business compared to men. <br />170. The exact interpretation depends upon the functional form of the model. <br />106 0 2020 Colette Holt & Associates, All Rights Reserved. <br />