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Tobit at Fifty: A Brief History of Tobin's Remarkable Estimator, of Related Empirical Methods, and of Limited Dependent Variable Econometrics in Health Economics

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  • Kohei Enami
  • John Mullahy

Abstract

Practitioners of empirical health economics might be forgiven for paying little heed to the recent 50th anniversary of the publication of one of the most important papers in its methodological heritage: James Tobin's widely-cited 1958 Econometrica paper that developed what later became known as the Tobit estimator. This golden anniversary milestone provides a fitting opportunity to reflect on Tobin's contribution and to assess the role that econometric limited dependent variable modeling has played in empirical health economics. Of primary focus here is how Tobin's estimator came to be and came to take root in empirical health economics. The paper provides a brief history of Tobin's estimator and related methods up through about 1971, discusses the early applications of Tobit and related estimators in health economics, i.e. the "technology diffusion" of Tobit in health economics, and offers some concluding remarks.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14512.

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Date of creation: Nov 2008
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Handle: RePEc:nbr:nberwo:14512

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  1. Newhouse, Joseph P. & Phelps, Charles E. & Marquis, M. Susan, 1980. "On having your cake and eating it too : Econometric problems in estimating the demand for health services," Journal of Econometrics, Elsevier, vol. 13(3), pages 365-390, August.
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  8. Powell, James L., 1984. "Least absolute deviations estimation for the censored regression model," Journal of Econometrics, Elsevier, vol. 25(3), pages 303-325, July.
  9. James Tobin, 1955. "The Application of Multivariate Probit Analysis to Economic Survey Data," Cowles Foundation Discussion Papers 1, Cowles Foundation for Research in Economics, Yale University.
  10. James Tobin, 1956. "Estimation of Relationships for Limited Dependent Variables," Cowles Foundation Discussion Papers 3R, Cowles Foundation for Research in Economics, Yale University.
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  21. Andrew M. Jones, 2012. "health econometrics," The New Palgrave Dictionary of Economics, Palgrave Macmillan.
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  23. Newhouse, Joseph P, 1987. "Health Economics and Econometrics," American Economic Review, American Economic Association, vol. 77(2), pages 269-74, May.
  24. Manning, W. G. & Duan, N. & Rogers, W. H., 1987. "Monte Carlo evidence on the choice between sample selection and two-part models," Journal of Econometrics, Elsevier, vol. 35(1), pages 59-82, May.
  25. Duan, Naihua, et al, 1983. "A Comparison of Alternative Models for the Demand for Medical Care," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(2), pages 115-26, April.
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