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Modelling Tobacco Consumption with a Zero-Inflated Ordered Probit Model

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  • Xueyan Zhao
  • Mark Harris

Abstract

It is quite often in economics that we wish to model a discrete ordered random variable, such as bond ratings, employment status, consumption levels and so on. However, traditional approaches to modelling such a discrete ordered random variable ignore both the potential build-up of zero obsersavtions typically observed and, relatedly, that these zeros might come from two distinct situations: non-participants and infrequent consumers. Analogously to the zero inflated (augmented) poisson (and negative binomial) count models, we propose a zero inflated Ordered Probit model. Monte Carlo results suggest that the new model performs well when the data is generated according to such a process and that a Likelihood Ratio-type statistic has good properties in selecting the correct model. Finally, the model is applied to a consumer choice problem of tobacco consumption

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society 2004 Australasian Meetings with number 363.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:ausm04:363

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Keywords: Ordered outcomes; discrete data; drug consumption; zero-inflated responses.;

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References

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  9. Lisa Farrell & Tim R. L. Fry & Mark N. Harris, 2003. "“A Pack A Day For Twenty Years”:Smoking And Cigarette Pack Sizes," Department of Economics - Working Papers Series 887, The University of Melbourne.
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Cited by:
  1. Kenneth W. Clements & Xueyan Zhao, 2005. "Economic Aspects of Marijuana," Economics Discussion / Working Papers 05-28, The University of Western Australia, Department of Economics.
  2. Harris, Mark N. & Zhao, Xueyan, 2007. "A zero-inflated ordered probit model, with an application to modelling tobacco consumption," Journal of Econometrics, Elsevier, vol. 141(2), pages 1073-1099, December.
  3. William Greene, 2007. "Discrete Choice Modeling," Working Papers 07-6, New York University, Leonard N. Stern School of Business, Department of Economics.
  4. Brooks, Robert & Harris, Mark & Spencer, Christopher, 2007. "An Inflated Ordered Probit Model of Monetary Policy: Evidence from MPC Voting Data," MPRA Paper 8509, University Library of Munich, Germany.
  5. Abdulbaki Bilgic & Wojciech Florkowski & Cuma Akbay, 2010. "Demand for cigarettes in Turkey: an application of count data models," Empirical Economics, Springer, vol. 39(3), pages 733-765, December.

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