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A Simple Test for the Absence of Covariate Dependence in Duration Models

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Author Info
Bhattacharjee, A.

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Abstract

This paper describes a simple extension of popular tests of equality of hazard rates in a two-sample or k-sample setup to a situation where the covariate under study is continuous. In other words, we test the null hypothesis that the hazard does not depend on the value of the covariate against the omnibus alternative, where the covariate is continuous. The tests developed are also useful in detecting trend in the underlying hazard rates (i.e., when the alternative hypothesis postulates that the hazard function is increasing or decreasing in the value of the covariate, for all durations) or changepoint trend alternatives (where the hazard function increases in covariate value over one range of the covariate space, and decreases over another). Asymptotic distributions of the test statistics are established using counting process techniques. Small sample properties of the tests are studied, and the use of the tests in empirical applications is illustrated.

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File URL: http://www.econ.cam.ac.uk/dae/repec/cam/pdf/cwpe0401.pdf
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Publisher Info
Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0401.

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Length: 21
Date of creation: Jan 2004
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Handle: RePEc:cam:camdae:0401

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Related research
Keywords: Covariate dependence; Continuous covariate; Two-sample tests; Trend tests;

Find related papers by JEL classification:
C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Hypothesis Testing
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis
C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing

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References listed on IDEAS
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  1. Joel L. Horowitz, 1999. "Semiparametric Estimation of a Proportional Hazard Model with Unobserved Heterogeneity," Econometrica, Econometric Society, vol. 67(5), pages 1001-1028, September.
  2. Li, Yi-Hwei & Klein, John P. & Moeschberger, M. L., 1996. "Effects of model misspecification in estimating covariate effects in survival analysis for small sample sizes," Computational Statistics & Data Analysis, Elsevier, vol. 22(2), pages 177-192, July. [Downloadable!] (restricted)
  3. Bhattacharjee, A. & Samarjit Das, 2002. "Testing Proportionality in Duration Models with Respect to Continuous Covariates," Cambridge Working Papers in Economics 0220, Faculty of Economics, University of Cambridge. [Downloadable!]
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