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Using copulas to estimate reduced-form systems of equations

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  • Casey Quinn
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    Abstract

    This paper introduces a new approach to measuring the association between health and socioeconomic status. Measuring inequalities in health is difficult when health is measured qualitatively, specifically on an ordinal scale. This paper demonstrates a rank-based dependence measure - the copula - that is invariant to both the scale and any monotonic transformations of its dimensions. Accordingly, the copula measure of association between health and income is robust under different cardinal scales for health as well as different income distributions, and can be used for ordering countries. The copula is also used to generate contingency tables of joint probability, which illustrate how this ordering can be due to polarity in the distributions of health and income, as well as stronger association between the distributions of health and income.

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    File URL: http://www.york.ac.uk/media/economics/documents/herc/wp/07_25.pdf
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    Bibliographic Info

    Paper provided by HEDG, c/o Department of Economics, University of York in its series Health, Econometrics and Data Group (HEDG) Working Papers with number 07/25.

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    Date of creation: Oct 2007
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    Handle: RePEc:yor:hectdg:07/25

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    Postal: HEDG/HERC, Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
    Phone: (0)1904 323776
    Fax: (0)1904 323759
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    Web page: http://www.york.ac.uk/res/herc/research/hedg/
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    Cited by:
    1. José M. R. Murteira & Óscar D. Lourenço, 2007. "Health Care Utilization and Self-Assessed Health Specification of Bivariate Models Using Copulas," Health, Econometrics and Data Group (HEDG) Working Papers 07/27, HEDG, c/o Department of Economics, University of York.

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