Modelling Tobacco Consumption with a Zero-Inflated Ordered Probit Model
AbstractIt 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 InfoPaper provided by Econometric Society in its series Econometric Society 2004 Australasian Meetings with number 363.
Date of creation: 11 Aug 2004
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Ordered outcomes; discrete data; drug consumption; zero-inflated responses.;
Other versions of this item:
- Mark N. Harris & Xueyan Zhao, 2004. "Modelling Tobacco Consumption with a Zero-Inflated Ordered Probit Model," Monash Econometrics and Business Statistics Working Papers 14/04, Monash University, Department of Econometrics and Business Statistics.
- A - General Economics and Teaching
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