Specification and Simulated Likelihood Estimation of a Non-normal Outcome Model with Selection: Application to Health Care Utilization
AbstractWe develop a model specification and estimation framework that is applicable to many microeconometric models which fall into a treatment-outcome framework. We apply our methodology to examine the causal effect of man-aged care on the utilization of health care services. Specifically, we jointly model multinomial choice of insurance plans (treatment) and counts and binary choices of utilization (outcome) using a latent factor structure, enabling a distinction between selection on unobservables and observables. We apply maximum simulated likelihood techniques to estimate the parameters of our model and find that there are significant unobserved self-selection effects and that these effects substantially change the effects of insurance on utilization.
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Bibliographic InfoPaper provided by Hunter College: Department of Economics in its series Hunter College Department of Economics Working Papers with number 02/5.
Length: 35 pages
Date of creation: 2002
Date of revision: 2004
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-11-18 (All new papers)
- NEP-DCM-2002-11-18 (Discrete Choice Models)
- NEP-ECM-2002-11-18 (Econometrics)
- NEP-HEA-2002-11-18 (Health Economics)
- NEP-LTV-2002-11-04 (Unemployment, Inequality & Poverty)
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