In health economics applications involving outcomes (y) and covariates (x), it is often the case that the central inferential problems of interest involve E[y|x] and its associated partial effects or elasticities. Many such outcomes have two fundamental statistical properties: yò0; and the outcome y=0 is observed with sufficient frequency that the zeros cannot be ignored econometrically. Common approaches to estimation in such instances include Tobit, selection, and two-part models. This paper (1) describes circumstances where the standard two-part model with homoskedastic retransformation will fail to provide consistent inferences about important policy parameters; and (2) demonstrates some alternative approaches that are likely to prove helpful in applications.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Technical Working Papers with number
0228.
Length: Date of creation: Mar 1998 Date of revision: Handle: RePEc:nbr:nberte:0228
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Find related papers by JEL classification: I1 - Health, Education, and Welfare - - Health C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
References listed on IDEAS 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.:
Wooldridge, Jeffrey M, 1992.
"Some Alternatives to the Box-Cox Regression Model,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(4), pages 935-55, November.
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