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Counts With An Endogenous Binary Regressor: A Series Expansion Approach

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Author Info

  • Andrés Romeu

    ()
    (Universidad de Alicante)

  • Marcos Vera-Hernández

    ()
    (Institute for Fiscal Studies)

Abstract

We propose an estimator for count data regression models where a binary regressor is endogenously determined. This estimator departs from previous approaches by using a flexible form for the conditional probability function of the counts. Using a Monte Carlo experiment we show that our estimator improves the fit and provides a more reliable estimate of the impact of regressors on the count when compared to alternatives which do restrict the mean to be linear-exponential. In an application to the number of trips by households in the US, we find that the estimate of the treatment effect obtained is considerably different from the one obtained under a linear-exponential mean specification.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2004-36.pdf
File Function: Fisrt version / Primera version, 2004
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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2004-36.

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Length: 30 pages
Date of creation: Sep 2004
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2004-36

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Keywords: Count data; Polynominal Poisson Expansions; Flexible Functional Form.;

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References

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  1. Martin Schellhorn, 2001. "The effect of variable health insurance deductibles on the demand for physician visits," Health Economics, John Wiley & Sons, Ltd., vol. 10(5), pages 441-456.
  2. Goffe, William L. & Ferrier, Gary D. & Rogers, John, 1994. "Global optimization of statistical functions with simulated annealing," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 65-99.
  3. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
  4. Gallant, A. Ronald & Tauchen, George, 1997. "Estimation Of Continuous-Time Models For Stock Returns And Interest Rates," Macroeconomic Dynamics, Cambridge University Press, vol. 1(01), pages 135-168, January.
  5. Gurmu, Shiferaw & Trivedi, Pravin K, 1996. "Excess Zeros in Count Models for Recreational Trips," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(4), pages 469-77, October.
  6. John Mullahy, 1997. "Instrumental-Variable Estimation Of Count Data Models: Applications To Models Of Cigarette Smoking Behavior," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 586-593, November.
  7. Cameron, A Colin & Johansson, Per, 1997. "Count Data Regression Using Series Expansions: With Applications," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(3), pages 203-23, May-June.
  8. Frank Windmeijer & Joao Santos Silva, 1996. "Endogeneity in count data models; an application to demand for health care," IFS Working Papers W96/15, Institute for Fiscal Studies.
  9. Winfried Pohlmeier & Volker Ulrich, 1995. "An Econometric Model of the Two-Part Decisionmaking Process in the Demand for Health Care," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 339-361.
  10. Terza, Joseph V., 1998. "Estimating count data models with endogenous switching: Sample selection and endogenous treatment effects," Journal of Econometrics, Elsevier, vol. 84(1), pages 129-154, May.
  11. Coulson, N.E. & Terza, J. & Neslusan, C.A. & Stuart, B., 1995. "Estimating the Moral Hazard Effect of Supplemental Medical Insurance in the Demand for Prescription Drugs by the Elderly," Papers 04-95-01, Pennsylvania State - Department of Economics.
  12. Deb, Partha & Trivedi, Pravin K, 1997. "Demand for Medical Care by the Elderly: A Finite Mixture Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(3), pages 313-36, May-June.
  13. Donald S. Kenkel & Joseph V. Terza, 2001. "The effect of physician advice on alcohol consumption: count regression with an endogenous treatment effect," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(2), pages 165-184.
  14. �ngel Marcos Vera-Hernández, 1999. "Duplicate coverage and demand for health care. The case of Catalonia," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 579-598.
  15. Munkin, Murat K. & Trivedi, Pravin K., 2003. "Bayesian analysis of a self-selection model with multiple outcomes using simulation-based estimation: an application to the demand for healthcare," Journal of Econometrics, Elsevier, vol. 114(2), pages 197-220, June.
  16. Terza, Joseph V & Wilson, Paul W, 1990. "Analyzing Frequencies of Several Types of Events: A Mixed Multinomial-Poisson Approach," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 108-15, February.
  17. Gurmu, Shiferaw & Rilstone, Paul & Stern, Steven, 1998. "Semiparametric estimation of count regression models1," Journal of Econometrics, Elsevier, vol. 88(1), pages 123-150, November.
  18. Manning, Willard G. & Mullahy, John, 2001. "Estimating log models: to transform or not to transform?," Journal of Health Economics, Elsevier, vol. 20(4), pages 461-494, July.
  19. Andrews, Donald W. K., 1988. "Chi-square diagnostic tests for econometric models : Introduction and applications," Journal of Econometrics, Elsevier, vol. 37(1), pages 135-156, January.
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Cited by:
  1. Kevin E. Staub, 2009. "Simple tests for exogeneity of a binary explanatory variable in count data regression models," SOI - Working Papers 0904, Socioeconomic Institute - University of Zurich.
  2. Burda, Martin & Harding, Matthew & Hausman, Jerry, 2012. "A Poisson mixture model of discrete choice," Journal of Econometrics, Elsevier, vol. 166(2), pages 184-203.
  3. Hiroaki Masuhara, 2008. "Semi-nonparametric count data estimation with an endogenous binary variable," Economics Bulletin, AccessEcon, vol. 3(42), pages 1-13.
  4. Matilde P. Machado, & Ricardo Mora & Antonio Romero- Medina, 2006. "A Methodology To Measure Hospital Quality Using Physicians' Choices Over Training Vacancies," Economics Working Papers we060201, Universidad Carlos III, Departamento de Economía.
  5. Toni Mora, 2008. "The relevance of satisfaction with coverage for health care utilization: evidence from Catalonia," Hacienda Pública Española, IEF, vol. 184(1), pages 99-116, April.
  6. Paulo Arvate & Vladimir Ponczek, 2008. "Municipality secession, voter’s preference and persistence of power," Working Papers 08_07, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.
  7. repec:ebl:ecbull:v:3:y:2008:i:42:p:1-13 is not listed on IDEAS

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