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The Copula Approach to Sample Selection Modelling: An Application to the Recreational Value of Forests

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Author Info
Elisabetta Strazzera (DRES and CRENoS, University of Cagliari)
Margarita Genius (Dept. of Economics, University of Crete)
Abstract

The sample selection model is based upon a bivariate or a multivariate structure, and distributional assumptions are in this context more severe than in univariate settings, due to the limited availability of tractable multivariate distributions. While the standard FIML estimation of the selectivity model assumes normality of the joint distribution, alternative approaches require less stringent distributional hypotheses. As shown by Smith (2003), copulas allow great flexibility also in FIML models. The copula model is very useful in situations where the applied researcher has a prior on the distributional form of the margins, since it allows separating their modelling from that of the dependence structure. In the present paper the copula approach to sample selection is first compared to the semiparametric approach and to the standard FIML, bivariate normal model, in an illustrative application on female work data. Then its performance is analysed more thoroughly in an application to Contingent Valuation data on recreational values of forests.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.73.

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Date of creation: Apr 2004
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Handle: RePEc:fem:femwpa:2004.73

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Related research
Keywords: Contingent valuation Selectivity bias Bivariate models Copulas

Find related papers by JEL classification:
C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models
C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March. [Downloadable!] (restricted)
  2. Murray D. Smith, 2003. "Modelling sample selection using Archimedean copulas," Econometrics Journal, Royal Economic Society, vol. 6(1), pages 99-123, 06. [Downloadable!] (restricted)
  3. Horowitz, Joel L., 1993. "Semiparametric estimation of a work-trip mode choice model," Journal of Econometrics, Elsevier, vol. 58(1-2), pages 49-70, July. [Downloadable!] (restricted)
  4. Lee, Lung-Fei, 1982. "Some Approaches to the Correction of Selectivity Bias," Review of Economic Studies, Blackwell Publishing, vol. 49(3), pages 355-72, July. [Downloadable!] (restricted)
  5. Siu Fai Leung & Shihti Yu, 2000. "Collinearity and Two-Step Estimation of Sample Selection Models: Problems, Origins, and Remedies," Computational Economics, Springer, vol. 15(3), pages 173-199, June. [Downloadable!]
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  6. Elisabetta Strazzera & Margarita Genius & Riccardo Scarpa & George Hutchinson, . "The Effect Of Protest Votes On The Estimates Of Willingness To Pay For Use Values Of Recreational Sites," Working Papers 0106, University of Crete, Department of Economics. [Downloadable!]
  7. Elisabetta Strazzera & Riccardo Scarpa & Pinuccia Calia & Guy D. Garrod & Kenneth G. Willis, 2003. "Modelling zero values and protest responses in contingent valuation surveys," Applied Economics, Taylor and Francis Journals, vol. 35(2), pages 133-138, January. [Downloadable!] (restricted)
  8. Pagan, Adrian & Vella, Frank, 1989. "Diagnostic Tests for Models Based on Individual Data: A Survey," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages S29-59, Supplemen. [Downloadable!] (restricted)
  9. Maria Fraga O. Martins, 2001. "Parametric and semiparametric estimation of sample selection models: an empirical application to the female labour force in Portugal," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(1), pages 23-39. [Downloadable!]
  10. Donaldson, Cam, et al, 1998. "Limited Dependent Variables in Willingness to Pay Studies: Applications in Health Care," Applied Economics, Taylor and Francis Journals, vol. 30(5), pages 667-77, May. [Downloadable!] (restricted)
  11. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Blackwell Publishing, vol. 14(1), pages 53-68, February. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Margarita Genius & Elisabetta Strazzera, 2005. "Modeling Elicitation effects in contingent valuation studies: a Monte Carlo Analysis of the bivariate approach," Working Paper CRENoS 200502, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
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