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The Identification and Economic Content of Ordered Choice Models with Stochastic Thresholds

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Author Info

  • Cunha, Flavio

    ()
    (University of Pennsylvania)

  • Heckman, James J.

    ()
    (University of Chicago)

  • Navarro, Salvador

    ()
    (University of Wisconsin-Madison)

Abstract

This paper extends the widely used ordered choice model by introducing stochastic thresholds and interval-specific outcomes. The model can be interpreted as a generalization of the GAFT (MPH) framework for discrete duration data that jointly models durations and outcomes associated with different stopping times. We establish conditions for nonparametric identification. We interpret the ordered choice model as a special case of a general discrete choice model and as a special case of a dynamic discrete choice model.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2940.

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Length: 52 pages
Date of creation: Jul 2007
Date of revision:
Publication status: published in: International Economic Review, 2007, 48(4), 1273-1309
Handle: RePEc:iza:izadps:dp2940

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Keywords: ordered choice; discrete choice; dynamics;

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References

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  1. Martin Feldstein, 1983. "Behavioral Simulation Methods in Tax Policy Analysis," NBER Books, National Bureau of Economic Research, Inc, number feld83-2.
  2. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers, Federal Reserve Bank of Minneapolis 559, Federal Reserve Bank of Minneapolis.
  3. Edward Vytlacil, 2006. "Ordered Discrete-Choice Selection Models and Local Average Treatment Effect Assumptions: Equivalence, Nonequivalence, and Representation Results," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 578-581, August.
  4. Ridder, Geert, 1990. "The Non-parametric Identification of Generalized Accelerated Failure-Time Models," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 57(2), pages 167-81, April.
  5. James J. Heckman & Sergio Urzua & Edward Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 389-432, August.
  6. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  7. Heckman, James J, 1974. "Effects of Child-Care Programs on Women's Work Effort," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(2), pages S136-S163, Part II, .
  8. Fuss, Melvyn & McFadden, Daniel, 1978. "Production Economics: A Dual Approach to Theory and Applications (I): The Theory of Production," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, McMaster University Archive for the History of Economic Thought, volume 1, number fuss1978.
  9. James J. Heckman & Salvador Navarro, 2005. "Dynamic Discrete Choice and Dynamic Treatment Effects," NBER Technical Working Papers 0316, National Bureau of Economic Research, Inc.
  10. Feldstein, Martin (ed.), 1983. "Behavioral Simulation Methods in Tax Policy Analysis," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226240848.
  11. Abbring, Jaap H. & Heckman, James J., 2007. "Econometric Evaluation of Social Programs, Part III: Distributional Treatment Effects, Dynamic Treatment Effects, Dynamic Discrete Choice, and General Equilibrium Policy Evaluation," Handbook of Econometrics, Elsevier, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 72 Elsevier.
  12. Edward C. Prescott & Michael Visscher, 1977. "Sequential Location among Firms with Foresight," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 8(2), pages 378-393, Autumn.
  13. Matzkin, Rosa L., 1986. "Restrictions of economic theory in nonparametric methods," Handbook of Econometrics, Elsevier, in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 42, pages 2523-2558 Elsevier.
  14. Matzkin, Rosa L, 1992. "Nonparametric and Distribution-Free Estimation of the Binary Threshold Crossing and the Binary Choice Models," Econometrica, Econometric Society, Econometric Society, vol. 60(2), pages 239-70, March.
  15. James J. Heckrnan, 1974. "Effects of Child-Care Programs on Women's Work Effort," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 491-524 National Bureau of Economic Research, Inc.
  16. James J. Heckman & Vytlacil, Edward J., 2007. "Econometric Evaluation of Social Programs, Part I: Causal Models, Structural Models and Econometric Policy Evaluation," Handbook of Econometrics, Elsevier, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 70 Elsevier.
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Citations

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Cited by:
  1. Jane Cooley Fruehwirth & Salvador Navarro & Yuya Takahashi, 2011. "How The Timing of Grade Retention Affects Outcomes: Identification and Estimation of Time-Varying Treatment Effects," Working Papers, Human Capital and Economic Opportunity Working Group 2011-015, Human Capital and Economic Opportunity Working Group.
  2. Jaap Abbring & James Heckman, 2008. "Dynamic policy analysis," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP05/08, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  3. Stefan Boes, 2013. "Nonparametric analysis of treatment effects in ordered response models," Empirical Economics, Springer, Springer, vol. 44(1), pages 81-109, February.
  4. James Heckman & Sergio Urzua, 2010. "Comparing IV with structural models: what simple IV can and cannot identify," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP08/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  5. Stefan Boes, 2009. "Bounds on Counterfactual Distributions Under Semi-Monotonicity Constraints," SOI - Working Papers 0920, Socioeconomic Institute - University of Zurich.
  6. James J. Heckman & Sergio Urzua & Edward Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 389-432, August.
  7. James J. Heckman & Salvador Navarro, 2005. "Dynamic Discrete Choice and Dynamic Treatment Effects," NBER Technical Working Papers 0316, National Bureau of Economic Research, Inc.
  8. Stefan Boes, 2009. "Partial Identification of Discrete Counterfactual Distributions with Sequential Update of Information," SOI - Working Papers 0918, Socioeconomic Institute - University of Zurich.
  9. Timothy A. Weterings & Mark N. Harris & Bruce Hollingsworth, 2012. "Extending Unobserved Heterogeneity - A Strategy for Accounting for Respondent Perceptions in the Absence of Suitable Data," Monash Econometrics and Business Statistics Working Papers, Monash University, Department of Econometrics and Business Statistics 12/12, Monash University, Department of Econometrics and Business Statistics.
  10. Corrado, L. & Weeks, M., 2010. "Identification Strategies in Survey Response Using Vignettes," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 1031, Faculty of Economics, University of Cambridge.

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