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Probit Models with Binary Endogenous Regressors

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Author Info

  • Jacob Nielsen Arendt

    (Department of Business and Economics, University of Southern Denmark)

  • Anders Holm

    (Department of Sociology, University of Copenhagen)

Abstract

Sample selection and endogeneity are frequent causes of biases in non-experimental empirical studies. In binary models a standard solution involves complex multivariate models. A simple approximation has been shown to work well in bivariate models. This paper extends the approximation to a trivariate model. Simulations show that the approximation outperforms full maximum likelihood while a least squares approximation may be severely biased. The methods are used to estimate the influence of trust in the parliament and politicians on voting- propensity. No previous studies have allowed for endogeneity of trust on voting and it is shown to severely affect the results.

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File URL: http://www.econ.ku.dk/cam/wp0910/wp0406/2006-06.pdf/
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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics in its series CAM Working Papers with number 2006-06.

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Length: 19 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:kud:kuieca:2006_06

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Related research

Keywords: endogeneity; multivariate probit; approximation; Monte Carlo simulation;

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Citations

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Cited by:
  1. David Hensher, 2013. "Exploring the relationship between perceived acceptability and referendum voting support for alternative road pricing schemes," Transportation, Springer, vol. 40(5), pages 935-959, September.
  2. Demidova, Olga, 2011. "Modeling of public trust in basic social and political institutions: A comparative econometric analysis," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 21(1), pages 114-132.
  3. Damien S.Eldridge & Ilke Onur & Malathi Velamuri & Cagatay Koc, 2013. "The Impact of Private Hospital Insurance on the Utilization of Hospital Care In Australia," Working Papers 2013.03, School of Economics, La Trobe University.
  4. Raoul Minetti & Pierluigi Murro & Monica Paiella, 2011. "Ownership structure, governance, and innovation: Evidence from Italy," Discussion Papers 1_2011, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
  5. Ben Aoun - Peltier, Leila & Vicente Cuervo, Maria Rosalia, 2012. "E-commerce diffusion: exploring the determinants of the adoption and extent of usage at firm-level," MPRA Paper 49333, University Library of Munich, Germany.

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