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Least Squares And Entropy As Penalty Functions

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  • Preckel, Paul V.

Abstract

Mathematical measures of entropy as defined by Shannon (1948) and Kullback and Leibler (1951) are currently in vogue in the field of econometrics, primarily due to the comprehensive work by Golan, Judge, and Miller (1996). In this paper, an alternative interpretation of the entropy measure as a penalty function over deviations is presented. Using this interpretation, a number of parallels are drawn with least squares estimators, and it is demonstrated that, with a minor modification of the traditional least squares estimator, both approaches may be applied to the general linear model. The advantages and disadvantages of each approach are discussed, and a philosophical approach to the selection of estimation technique is suggested.

Suggested Citation

  • Preckel, Paul V., 1998. "Least Squares And Entropy As Penalty Functions," Staff Papers 28625, Purdue University, Department of Agricultural Economics.
    • Handle: RePEc:ags:puaesp:28625
    DOI: 10.22004/ag.econ.28625
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    File URL: https://ageconsearch.umn.edu/record/28625/files/sp98-16.pdf
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    References listed on IDEAS

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    1. Golan, Amos & Judge, George & Perloff, Jeffrey M, 1996. "Estimating the Size Distribution of Firms Using Government Summary Statistics," Journal of Industrial Economics, Wiley Blackwell, vol. 44(1), pages 69-80, March.
    2. Jay T. Akridge, 1989. "Measuring Productive Efficiency in Multiple Product Agribusiness Firms: A Dual Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 116-125.
    3. Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers Archive 1488, Iowa State University, Department of Economics.
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    Cited by:

    1. Arndt, Channing, 1999. "Demand For Herbicide In Corn: An Entropy Approach Using Micro-Level Data," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(1), pages 1-18, July.
    2. Alexandre Gohin, 2020. "Prospective sur l'évolution des systèmes agricoles sur les territoires bretons en lien avec la reconquête de la qualité de l'eau-Etude des impacts de ces évolutions sur les revenus, les emplois direct," Working Papers hal-03331840, HAL.

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