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

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  • Flavio Cunha
  • James J. Heckman
  • Salvador Navarro

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 National Bureau of Economic Research, Inc in its series NBER Technical Working Papers with number 0340.

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Date of creation: Jul 2007
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Publication status: published as THE IDENTIFICATION AND ECONOMIC CONTENT OF ORDERED CHOICE MODELS WITH STOCHASTIC THRESHOLDS† Flavio Cunha, James J. Heckman, Salvador Navarro‡ Article first published online: 11 DEC 2007 DOI: 10.1111/j.1468-2354.2007.00462.x International Economic Review Volume 48, Issue 4, pages 1273–1309, November 2007
Handle: RePEc:nbr:nberte:0340

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  1. James J. Heckman & Sergio Urzua & Edward J. Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," NBER Working Papers 12574, National Bureau of Economic Research, Inc.
  2. 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.
  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. Heckman, James J. & Navarro, Salvador, 2005. "Dynamic Discrete Choice and Dynamic Treatment Effects," IZA Discussion Papers 1790, Institute for the Study of Labor (IZA).
  5. Edward C. Prescott & Michael Visscher, 1977. "Sequential Location among Firms with Foresight," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 378-393, Autumn.
  6. Matzkin, Rosa L., 1986. "Restrictions of economic theory in nonparametric methods," Handbook of Econometrics, in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 42, pages 2523-2558 Elsevier.
  7. 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, August.
  8. Martin Feldstein, 1983. "Behavioral Simulation Methods in Tax Policy Analysis," NBER Books, National Bureau of Economic Research, Inc, number feld83-2.
  9. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  10. 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, volume 1, number fuss1978.
  11. Heckman, James J, 1974. "Effects of Child-Care Programs on Women's Work Effort," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages S136-S163, Part II, .
  12. Ridder, Geert, 1990. "The Non-parametric Identification of Generalized Accelerated Failure-Time Models," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 167-81, April.
  13. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
  14. 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, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 70 Elsevier.
  15. 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, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 72 Elsevier.
  16. Matzkin, Rosa L, 1992. "Nonparametric and Distribution-Free Estimation of the Binary Threshold Crossing and the Binary Choice Models," Econometrica, Econometric Society, vol. 60(2), pages 239-70, March.
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Cited by:
  1. 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 12/12, Monash University, Department of Econometrics and Business Statistics.
  2. James J. Heckman & Salvador Navarro, 2005. "Dynamic Discrete Choice and Dynamic Treatment Effects," NBER Technical Working Papers 0316, National Bureau of Economic Research, Inc.
  3. James Heckman & Sergio Urzua, 2010. "Comparing IV with structural models: what simple IV can and cannot identify," CeMMAP working papers CWP08/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  4. 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.
  5. 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 2011-015, Human Capital and Economic Opportunity Working Group.
  6. Stefan Boes, 2013. "Nonparametric analysis of treatment effects in ordered response models," Empirical Economics, Springer, vol. 44(1), pages 81-109, February.
  7. Stefan Boes, 2009. "Bounds on Counterfactual Distributions Under Semi-Monotonicity Constraints," SOI - Working Papers 0920, Socioeconomic Institute - University of Zurich.
  8. Corrado, L. & Weeks, M., 2010. "Identification Strategies in Survey Response Using Vignettes," Cambridge Working Papers in Economics 1031, Faculty of Economics, University of Cambridge.
  9. Jaap Abbring & James Heckman, 2008. "Dynamic policy analysis," CeMMAP working papers CWP05/08, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  10. Stefan Boes, 2009. "Partial Identification of Discrete Counterfactual Distributions with Sequential Update of Information," SOI - Working Papers 0918, Socioeconomic Institute - University of Zurich.

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