[U] User's Guide

[ U ] 20.11 Performing hypothesis tests on the coefficients 279test simplified the algebra of our hypothesis and then presented the test results. We discover thatthe hypothesis may be absurd but we cannot reject it at the 1% or even 4% level. We can also usetest’s accumulate option to combine this test with another test:. test foreign+weight=0, accum( 1) - weight + 5.0 weightsq + 3.0 foreign = 0( 2) weight + foreign = 0F( 2, 70) = 9.12Prob > F = 0.0003There are limitations. test can test only linear hypotheses. If we attempt to test a nonlinearhypothesis, test will tell us that it is not possible:. test weight/foreign=0not possible with testr(131);Testing nonlinear hypotheses is discussed in [U] 20.11.4 Nonlinear Wald tests below.20.11.2 Using testtest bases its results on the estimated variance–covariance matrix of the estimators (i.e., performsa Wald test), so it can be used after any estimation command. For maximum likelihood estimation,you will have to decide whether you want to perform tests on the basis of the information matrixinstead of constraining the equation, reestimating it, and then calculating the likelihood-ratio test (see[U] 20.11.3 Likelihood-ratio tests). Because test bases its results on the information matrix, itsresults have the same standing as the asymptotic z statistic presented in the coefficient table.Example 13Let’s examine the repair records of the cars in our automobile data as rated by Consumer Reports:. tabulate rep78 foreignRepairRecord Car type1978 Domestic Foreign Total1 2 0 22 8 0 83 27 3 304 9 9 185 2 9 11Total 48 21 69The values are coded 1–5, corresponding to well below average to well above average. We will fitthis variable by using a maximum-likelihood ordered logit model (the nolog option suppresses theiteration log, saving us some paper):