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Abstract

The stochastic frontier model used for continuous dependent variables is extended to accommodate output measured as a discrete ordinal outcome variable. Conditional on the inefficiency error, the assumptions of the ordered probit model are adopted for the log of output. Bayesian estimation utilizing a Gibbs sampler with data augmentation is applied to a convenient re-parameterisation of the model. Using panel data from an Australian longitudinal survey, demographic and socioeconomic characteristics are specified as inputs to health production, whereas production efficiency is made dependent on lifestyle factors. Posterior summary statistics are obtained for selected health status probabilities, efficiencies, and marginal effects.

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File URL: http://www.economics.unimelb.edu.au/downloads/wp/wp10/1092.pdf
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Bibliographic Info

Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1092.

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Length: 56 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:mlb:wpaper:1092

Contact details of provider:
Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
Phone: +61 3 8344 5289
Fax: +61 3 8344 6899
Email:
Web page: http://www.economics.unimelb.edu.au
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Related research

Keywords: Bayesian estimation; Gibbs sampling; ordered probit; production efficiency;

Other versions of this item:

Find related papers by JEL classification:

• C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
• C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
• C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
• I12 - Health, Education, and Welfare - - Health - - - Health Production

This paper has been announced in the following NEP Reports:

• NEP-ALL-2010-03-13 (All new papers)
• NEP-DCM-2010-03-13 (Discrete Choice Models)
• NEP-ECM-2010-03-13 (Econometrics)
• NEP-EFF-2010-03-13 (Efficiency & Productivity)

References

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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.:

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