Misclassification In Binary Choice Models
AbstractWe derive the asymptotic bias from misclassification of the dependent variable in binary choice models. Measurement error is necessarily non-classical in this case, which leads to bias in linear and non-linear models even if only the dependent variable is mismeasured. A Monte Carlo study and an application to food stamp receipt show that the bias formulas are useful to analyze the sensitivity of substantive conclusions, to interpret biased coefficients and imply features of the estimates that are robust to misclassification. Using administrative records linked to survey data as validation data, we examine estimators that are consistent under misclassification. They can improve estimates if their assumptions hold, but can aggravate the problem if the assumptions are invalid. The estimators differ in their robustness to such violations, which can be improved by incorporating additional information. We propose tests for the presence and nature of misclassification that can help to choose an estimator.
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Bibliographic InfoPaper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 13-27.
Length: 64 pages
Date of creation: May 2013
Date of revision:
measurement error; binary choice models; program take-up; food stamps.;
Find related papers by JEL classification:
- C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-04 (All new papers)
- NEP-DCM-2013-06-04 (Discrete Choice Models)
- NEP-ECM-2013-06-04 (Econometrics)
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