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Equation 2: e, the discrete realization of e star, equals one if the individual was admitted to an inpatient facility and zero otherwise. The probability that e equals one is equal to the value of uppercase phi (the standard normal distribution function) of X times beta plus y times gamma. This is the integral (over epsilon) from minus infinity to X times beta plus y times gamma of the function two times pi to the negative one-half times the exponent of minus epsilon squared over two.

Back to Equation 8.2

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