Copula bivariate probit models: with an application to medical expenditures
AbstractThe bivariate probit model is frequently used for estimating the effect of an endogenous binary regressor (the "treatment") on a binary health outcome variable. This paper discusses simple modifications that maintain the probit assumption for the marginal distributions while introducing non-normal dependence using copulas. In an application of the copula bivariate probit model to the effect of insurance status on the absence of ambulatory health care expen- diture, a model based on the Frank copula outperforms the standard bivariate probit model.
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Bibliographic InfoPaper provided by Department of Economics - University of Zurich in its series ECON - Working Papers with number 029.
Date of creation: Sep 2011
Date of revision:
Bivariate probit; binary endogenous regressor; Frank copula; Clayton copula;
Other versions of this item:
- Rainer Winkelmann, 2012. "Copula Bivariate Probit Models: With An Application To Medical Expenditures," Health Economics, John Wiley & Sons, Ltd., vol. 21(12), pages 1444-1455, December.
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- I12 - Health, Education, and Welfare - - Health - - - Health Production
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-15 (All new papers)
- NEP-ECM-2011-10-15 (Econometrics)
- NEP-HEA-2011-10-15 (Health Economics)
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