Evaluating Pseudo-R2's for binary probit models

Many applied researchers of limited dependent variable models found it disadvantageous that a widely accepted Pseudo-R2 does not exist for this type of estimation. The paper provides guidance for researchers in choosing a Pseudo-R2 in the binary probit case. The starting point is that R2 is best understood in the ordinary least squares (OLS) case with continuous data, which is chosen as the reference situation. It is considered which Pseudo-R2 …