Power of Tests in Binary Response Models

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Power of Tests in Binary Response Models

Author Info

N.E. Savin (Univ. of Iowa)
Allan Wurtz (Univ of Iowa)

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Allan H. Würtz

Abstract

Most hypotheses in binary response models are composite. The null hypothesis is usually that one or more slope coefficients are zero. Typically, the sequence of alternatives of interest is one in which the slope coefficients are increasing in absolute value. In this paper, we prove that the power goes to zero for this sequence of alternatives of interest in cases which often occur in practice. The practical implication is that for the sequence of alternatives of interest the power is nonmonotonic. This is true for any non-randomized test with size less than one and for a wide class of binary response models which includes the logit and probit models.

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Paper provided by EconWPA in its series Econometrics with number 9606001.

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Length: 14 pages
Date of creation: 17 Jun 1996
Date of revision: 05 Jul 1996
Handle: RePEc:wpa:wuwpem:9606001

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Article
- N. E. Savin & A. H. Wurtz, 1999. "Power of Tests in Binary Response Models," Econometrica, Econometric Society, vol. 67(2), pages 413-422, March.
Paper
- Savin, N.E. & Wurtz, A., 1996. "Power of tests in Binary Response Models," Working Papers 96-06, University of Iowa, Department of Economics.

Find related papers by JEL classification:
C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General
C5 - Mathematical and Quantitative Methods - - Econometric Modeling
C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs

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.:

Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December. [Downloadable!] (restricted)
Nelson, Forrest D & Savin, N E, 1990. "The Danger of Extrapolating Asymptotic Local Power," Econometrica, Econometric Society, vol. 58(4), pages 977-81, July. [Downloadable!] (restricted)
Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier. [Downloadable!] (restricted)

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