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Hausman Tests for Inefficient Estimators: Application to Demand for Health Care Service (revised)

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Author Info
Michael Creel ()
Abstract

The Hausman (1978) test is based on the vector of differences of two estimators. It is usually assumed that one of the estimators is fully efficient, since this simplifies calculation of the test statistic. However, this assumption limits the applicability of the test, since widely used estimators such as the generalized method of moments (GMM) or quasi maximum likelihood (QML) are often not fully efficient. This paper shows that the test may easily be implemented, using well-known methods, when neither estimator is efficient. To illustrate, we present both simulation results as well as empirical results for utilization of health care services.

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Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 509.02.

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Length: 19
Date of creation: 16 Apr 2002
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Handle: RePEc:aub:autbar:509.02

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Related research
Keywords: Hausman test; specification testing; health care utilization;

Find related papers by JEL classification:
C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Hypothesis Testing
C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing
I10 - Health, Education, and Welfare - - Health - - - General

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    Other versions:
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