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Ordered Response Models

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Author Info
Stefan Boes () (Socioeconomic Institute, University of Zurich)
Rainer Winkelmann () (Socioeconomic Institute, University of Zurich)

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Abstract

We discuss regression models for ordered responses, such as ratings of bonds, schooling attainment, or measures of subjective well-being. Commonly used models in this context are the ordered logit and ordered probit regression models. They are based on an underlying latent model with single index function and constant thresholds. We argue that these approaches are overly restrictive and preclude a flexible estimation of the effect of regressors on the discrete outcome probabilities. For example, the signs of the marginal probability effects can only change once when moving from the smallest category to the largest one. We then discuss several alternative models that overcome these limitations. An application illustrates the benefit of these alternatives.

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File URL: http://www.soi.uzh.ch/research/wp/2005/wp0507.pdf
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Publisher Info
Paper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 0507.

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Length: 21 pages
Date of creation: Mar 2005
Date of revision:
Publication status: Published in Allgemeines Statistisches Archiv 90, 2006, pages 165-179
Handle: RePEc:soz:wpaper:0507

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Related research
Keywords: Marginal effects; generalized threshold; sequential model; random coeffcients; latent class analysis; happiness;

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Find related papers by JEL classification:
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
I29 - Health, Education, and Welfare - - Education - - - Other

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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.:
  1. Yves Schneider & Peter Zweifel, 2004. "How Much Internalization of Nuclear Risk Through Liability Insurance?," Journal of Risk and Uncertainty, Springer, vol. 29(3), pages 219-240, December. [Downloadable!]
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  2. Ulf Olsson, 1979. "Maximum likelihood estimation of the polychoric correlation coefficient," Psychometrika, Springer, vol. 44(4), pages 443-460, December. [Downloadable!] (restricted)
  3. Boes, Stefan & Winkelmann, Rainer, 2004. "Income and Happiness: New Results from Generalized Threshold and Sequential Models," IZA Discussion Papers 1175, Institute for the Study of Labor (IZA). [Downloadable!]
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  4. Andreas Polk & Armin Schmutzler, 2003. "Lobbying against Environmental Regulation vs. Lobbying for Loopholes," Working Papers 0301, University of Zurich, Socioeconomic Institute. [Downloadable!]
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  5. Borek, Thomas & Bühler, Stefan & Schmutzler, Armin, 2003. "Weddings with Uncertain Prospects - Mergers under Asymmetric Information," CEPR Discussion Papers 3839, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2004. "Valuing Public Goods: The Life Satisfaction Approach," CREMA Working Paper Series 2004-11, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
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  7. Everitt, B. S., 1988. "A finite mixture model for the clustering of mixed-mode data," Statistics & Probability Letters, Elsevier, vol. 6(5), pages 305-309, April. [Downloadable!] (restricted)
  8. Dennis L. Gärtner & Daniel Halbheer, 2008. "Are There Waves in Merger Activity After All?," Working Papers 0092, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
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  9. Bühler, Stefan & Schmutzler, Armin, 2003. "Who Integrates?," CEPR Discussion Papers 4066, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  10. Zava Aydemir & Stefan Buehler, 2002. "Estimating Vertical Foreclosure in U.S. Gasoline Supply," Working Papers 0212, University of Zurich, Socioeconomic Institute. [Downloadable!]
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  11. Mahler, Philippe & Winkelmann, Rainer, 2004. "Single Motherhood and (Un)Equal Educational Opportunities: Evidence for Germany," IZA Discussion Papers 1391, Institute for the Study of Labor (IZA). [Downloadable!]
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  12. Bellemare, C. & Melenberg, B. & Soest, A. van, 2002. "Semi-parametric models for satisfaction with income," Discussion Paper 87, Tilburg University, Center for Economic Research. [Downloadable!]
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  13. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February. [Downloadable!] (restricted)
  14. Frey, Bruno S. & Stutzer, Alois, 2000. "Happiness, Economy and Institutions," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  15. Stewart, Mark B., 2005. "A comparison of semiparametric estimators for the ordered response model," Computational Statistics & Data Analysis, Elsevier, vol. 49(2), pages 555-573, April. [Downloadable!] (restricted)
  16. Michael A. Shields & Stephen Wheatley Price, 2005. "Exploring the economic and social determinants of psychological well-being and perceived social support in England," Journal Of The Royal Statistical Society Series A, Royal Statistical Society, vol. 168(3), pages 513-537. [Downloadable!] (restricted)
  17. Yves Schneider & Peter Zweifel, 2005. "Spatial Effects in Willingness-to-Pay: The Case of Two Nuclear Risks," Working Papers 0502, University of Zurich, Socioeconomic Institute, revised Sep 2007. [Downloadable!]
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(explanations, 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.)

  1. Simon Luechinger & Alois Stutzer & Rainer Winkelmann, 2008. "Self-Selection and Subjective Well-Being: Copula Models with an Application to Public and Private Sector Work," SOEPpapers 135, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
  2. Andrew M. Jones & Stefanie Schurer, 2007. "How does heterogeneity shape the socioeconomic gradient in health satisfaction?," Health, Econometrics and Data Group (HEDG) Working Papers 07/05, HEDG, c/o Department of Economics, University of York. [Downloadable!]
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  3. Gloede, Oliver & Menkhoff, Lukas, 2009. "Financial professionals' overconfidence: Is it experience, job, or attitude?," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover dp-428, Universität Hannover, Wirtschaftswissenschaftliche Fakultät. [Downloadable!]
  4. Mallick, Debdulal, 2009. "Marginal and Interaction Effects in Ordered Response Models," MPRA Paper 9617, University Library of Munich, Germany. [Downloadable!]
  5. Sandra Hanslin, 2008. "The effect of trade openness on optimal government size under endogenous firm entry," Working Papers 0802, University of Zurich, Socioeconomic Institute. [Downloadable!]
  6. Thomas Cornelißen & Christian Pfeifer, 2007. "The Impact of Participation in Sports on Educational Attainment: New Evidence from Germany," SOEPpapers 68, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
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  7. Stefan Boes, 2007. "Nonparametric Analysis of Treatment Effects in Ordered Response Models," Working Papers 0709, University of Zurich, Socioeconomic Institute. [Downloadable!]
  8. Johannes Schoder & Peter Zweifel, 2008. "Managed Care Konzepte und Lösungsansätze– Ein internationaler Vergleich aus schweizerischer Sicht," Working Papers 0801, University of Zurich, Socioeconomic Institute. [Downloadable!]
  9. Oscar Bernal & Jean-Yves Gnabo, 2007. "Talks, financial operations or both? Generalizing central banks’ FX reaction functions," Working Papers DULBEA 07-03.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
  10. Adrian Bruhin & Rainer Winkelmann, 2009. "Happiness functions with preference interdependence and heterogeneity: the case of altruism within the family," Journal of Population Economics, Springer, vol. 22(4), pages 1063-1080, October. [Downloadable!] (restricted)
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  11. Karolin Becker & Peter Zweifel, 2005. "Cost Sharing in Health Insurance: An Instrument for Risk Selection?," Working Papers 0513, University of Zurich, Socioeconomic Institute. [Downloadable!]
  12. Garcia, Alexis Arthur B. & Rejesus, Roderick M. & Genio, Emmanuel L., 2008. "Factors Influencing Artisanal Fisherfolks' Level of Support for Fishery Regulations: An Approach Using Alternative Ordered Logit Models," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6791, Southern Agricultural Economics Association. [Downloadable!]
  13. Daniel Halbheer & Ernst Fehr & Lorenz Goette & Armin Schmutzler, 2007. "Self-Reinforcing Market Dominance," Working Papers 0711, University of Zurich, Socioeconomic Institute. [Downloadable!]
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