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Probit with heteroscedasticity: an application to Indian poverty analysis

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  • Ashok Parikh
  • Kunal Sen

Abstract

This study argues that in limited dependent variable models, when there is heteroscedasticity, a probit model with a heteroscedastic structure should be estimated. The problem is illustrated using unit record data from the Indian National Sample Survey to analyse the determinants of poverty at household level. It is found that these biases are large even with large number of observations because in the limited dependent variable case, the bias does not vanish asymptotically when the assumption of homoscedasticity breaks down. Both regression coefficients and marginal effects differ widely between probit and hetprobit models in this study.

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  • Ashok Parikh & Kunal Sen, 2006. "Probit with heteroscedasticity: an application to Indian poverty analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 13(11), pages 699-707.
  • Handle: RePEc:taf:apeclt:v:13:y:2006:i:11:p:699-707
    DOI: 10.1080/13504850500402096
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    References listed on IDEAS

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    1. J.V. Meenakshi & Ranjan Ray, 1999. "Impact of Household Size, Family Composition and Socio Economic Characteristics on Poverty in Rural India," Working papers 68, Centre for Development Economics, Delhi School of Economics.
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    8. Dreze, Jean & Srinivasan, P. V., 1997. "Widowhood and poverty in rural India: Some inferences from household survey data," Journal of Development Economics, Elsevier, vol. 54(2), pages 217-234, December.
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    Cited by:

    1. Yong Tu & Seow Ong & Ying Han, 2009. "Turnovers and Housing Price Dynamics: Evidence from Singapore Condominium Market," The Journal of Real Estate Finance and Economics, Springer, vol. 38(3), pages 254-274, April.

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