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Fitting and interpreting Cragg's tobit alternative using Stata

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  • William J. Burke

    ()
    (Department of Agricultural, Food, and Resource Economics, Michigan State University)

Abstract

In this article, I introduce the user-written command craggit, which simultaneously fits both tiers of Cragg’s (1971, Econometrica 39: 829–844) "two- tier" (sometimes called "two-stage" or "double-hurdle") alternative to tobit for corner-solution models. A key limitation to the tobit model is that the probability of a positive value and the actual value, given that it is positive, are determined by the same underlying process (i.e., the same parameters). Cragg proposed a more flexible alternative that allows these outcomes to be determined by separate processes through the incorporation of a probit model in the first tier and a truncated normal model in the second. Also, tobit is nested in craggit, making the latter a popular choice among "two-tier" models. In the article, I also present postestimation syntax to facilitate the understanding and interpretation of results.

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Bibliographic Info

Article provided by StataCorp LP in its journal Stata Journal.

Volume (Year): 9 (2009)
Issue (Month): 4 (December)
Pages: 584-592

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Handle: RePEc:tsj:stataj:v:9:y:2009:i:4:p:584-592

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Related research

Keywords: craggit; two tier; two stage; double hurdle; corner-solution models; Craggit’s tobit;

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Cited by:
  1. Kolawole Ogundari, 2013. "A Note on Socio-Economic Characteristics and the Demand for Beverages in Nigeria: Does Income Matter?," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 43(3), pages 293-302, December.
  2. David Roodman, 2009. "Estimating Fully Observed Recursive Mixed-Process Models with cmp," Working Papers 168, Center for Global Development.
  3. Chapoto, Antony & Ragasa, Catherine, 2013. "Moving in the right direction? Maize productivity and fertilizer use and use intensity in Ghana:," IFPRI discussion papers 1314, International Food Policy Research Institute (IFPRI).
  4. Reyes, Byron & Donovan, Cynthia & Bernsten, Richard H. & Maredia, Mywish K., 2012. "Market participation and sale of potatoes by smallholder farmers in the central highlands of Angola: A Double Hurdle approach," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126655, International Association of Agricultural Economists.
  5. Fischer, Elisabeth & Qaim, Matin, 2011. "Smallholder Farmers and Collective Action: What Determines the Intensity of Participation?," Discussion Papers 108551, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
  6. Daniel Hamermesh & Stephen Trejo, 2013. "How do immigrants spend their time? The process of assimilation," Journal of Population Economics, Springer, vol. 26(2), pages 507-530, April.
  7. Daniel S. Hamermesh & Stephen J. Trejo, 2010. "How Do Immigrants Spend Time?: The Process of Assimilation," NBER Working Papers 16430, National Bureau of Economic Research, Inc.
  8. Hichaambwa, Munguzwe & Jayne, T. S., 2014. "Poverty Reduction Potential of Increasing Smallholder Access to Land," Food Security Collaborative Working Papers 171873, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  9. Ngoma, Hambulo & Mulenga, Brian P. & Jayne, T.S., 2014. "What Explains Minimal Usage of Minimum Tillage Practices in Zambia? Evidence from District-Representative Data," Food Security Collaborative Working Papers 165886, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  10. Mulenga, Brian P. & Richardson, Robert B. & Tembo, Gelson, 2012. "Non-Timber Forest Products and Rural Poverty Alleviation in Zambia," Food Security Collaborative Working Papers 123220, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  11. Mark C. Senia & Helen H. Jensen & Oleksandr Zhylyevskyy, 2014. "Time in Eating and Food Preparation among Single Adults," Center for Agricultural and Rural Development (CARD) Publications 14-wp549, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  12. Rao, Elizaphan J.O. & Qaim, Matin, 2011. "The supermarket revolution and impacts on agricultural labor markets: Empirical evidence from Kenya," Discussion Papers 107745, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
  13. Noltze, Martin & Schwarze, Stefan & Qaim, Matin, 2011. "Understanding the adoption of systemic innovations in smallholder agriculture: the System of Rice Intensification (SRI) in Timor Leste," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114604, European Association of Agricultural Economists.
  14. Hadrich, Joleen C. & Larsen, Ryan A. & Olson, Frayne E., 2012. "Incentives for Machinery Investment," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124897, Agricultural and Applied Economics Association.
  15. Pagán, Ricardo, 2013. "Time allocation of disabled individuals," Social Science & Medicine, Elsevier, vol. 84(C), pages 80-93.
  16. David Roodman, 2011. "Fitting fully observed recursive mixed-process models with cmp," Stata Journal, StataCorp LP, vol. 11(2), pages 159-206, June.
  17. Fischer, Elisabeth & Qaim, Matin, 2011. "Smallholder Farmers and Collective Action: What Determines the Intensity of Participation?," Proceedings of the German Development Economics Conference, Berlin 2011 28, Verein für Socialpolitik, Research Committee Development Economics.
  18. Yu, Bingxin & Nin-Pratt, Alejandro & Funes, José & Gemessa, Sinafikeh Asrat, 2011. "Cereal production and technology adoption in Ethiopia:," ESSP working papers 31, International Food Policy Research Institute (IFPRI).
  19. Sigei, Geoffrey & Bett, Hillary & Kibet, Lawrence, 2014. "Determinants of Market Participation among Small-scale Pineapple Farmers in Kericho County, Kenya," MPRA Paper 56149, University Library of Munich, Germany.
  20. Sheahan, Megan & Ariga, Joshua & Jayne, T.S., 2013. "Modeling the Effects of Input Market Reforms on Fertilizer Demand and Maize Production: A Case Study of Kenya," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150697, Agricultural and Applied Economics Association.
  21. Mario Mechtel & Tim Friehe, 2014. "Gambling to Leapfrog in Status?," IAAEU Discussion Papers 201404, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  22. Rao, Elizaphan J.O. & Qaim, Matin, 2013. "Supermarkets and agricultural labor demand in Kenya: A gendered perspective," Food Policy, Elsevier, vol. 38(C), pages 165-176.

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