A New Measure of Fit for Equations With Dichotomous Dependent Variables

Abstract

The econometrics literature contains many alternative measures of goodness of fit, roughly analogous to R 2, for use with equations with dichotomous dependent variables. There is, however, no consensus as to the measures' relative merits or about which ones should be reported in empirical work. This article proposes a new measure that possesses several useful properties that the other measures lack. The new measure may be interpreted intuitively in a similar way to R 2 in the linear regression context.