Why is the inclusion of a product term in a regression model referred to as nonadditive?
In regular regression, the relationship between the independent and dependent variables is referred to as additive. This is based on the assumption that the effect of an independent variable on a dependent variable is constant regardless of the value of any other independent variable. For example, in interpreting a beta coefficient produced by regular regression we are taught to interpret the relationship along these lines: for every one unit increase in X1 there is a ____ change in the dependent variable. This implies that for all values of the independent variable the effect on the dependent variable is constant, regardless of the value of a second independent variable. The inclusion of an interaction term is “nonadditive”, meaning that the effect of one independent variable on the dependent variable varies according the value of a second independent variable.
Related Questions
- Does the addition of a product term cause certain coefficients that are significant in an additive model to be non-significant in an interactive model?
- Does the inclusion of a product term in model estimation dramatically change the parameter estimates of the constituent variables?
- What are the disadvantages of including a relevant product term to a model?
