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Calculating marginal effects in models for zero expenditures in household budgets using a Heckman-type correction

Author

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  • Atanu Saha
  • Oral Capps
  • Patrick Byrne

Abstract

Using the Heckamn approach, either in single-equation or multi-equation settings, general expressions are derived for calculating marginal effects and elasticities. In the conventional calculation of marginal effects, terms related to the change in the inverse of Mills ratio are omitted. Using data from the 19877-88 Nationwide Food Consumption Survey, we calculate income and household size elasticities for 12 food commodities. We compare the magnitudes and signs of the elasticities using the conventional expressions of marginal effects and our derived expressions. Bottomline, sizeable differences, especially in single-equation applications, can occur in calculating marginal effects if one fails to account for changes in the inverse of the Mills ratio.

Suggested Citation

  • Atanu Saha & Oral Capps & Patrick Byrne, 1997. "Calculating marginal effects in models for zero expenditures in household budgets using a Heckman-type correction," Applied Economics, Taylor & Francis Journals, vol. 29(10), pages 1311-1316.
  • Handle: RePEc:taf:applec:v:29:y:1997:i:10:p:1311-1316
    DOI: 10.1080/00036849700000021
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    Cited by:

    1. Colin Vance & Ralf Hedel, 2006. "On the Link between Urban Form and Automobile Use - Evidence from German Survey Data," RWI Discussion Papers 0048, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
    2. repec:zbw:rwidps:0048 is not listed on IDEAS
    3. repec:zbw:rwidps:0039 is not listed on IDEAS
    4. Rodolfo Hoffmann & Ana Lucia Kassouf, 2005. "Deriving conditional and unconditional marginal effects in log earnings equations estimated by Heckman's procedure," Applied Economics, Taylor & Francis Journals, vol. 37(11), pages 1303-1311.
    5. Vance, Colin, 2006. "Marginal Effects and Significance Testing with Heckman's Sample Selection Model: A Methodological Note," RWI Discussion Papers 39, RWI - Leibniz-Institut für Wirtschaftsforschung.
    6. Short, Gianna & Peterson, Hikaru, 2016. "Does time spent preparing food affect consumers’ food choices?," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 244990, Agricultural and Applied Economics Association.
    7. Prof. Dr. Hesse, Klaus & Dr. Hoffmann, Claudia & Dr. Thiele, Silke, 2002. "Änderungen der Struktur der Nachfrage nach Nahrungs-und Genußmitteln privater Haushalte und deren Bedeutung für die Ernährungs- und Agrarwirtschaft Schleswig-Holsteins," FE Working Papers 0302, Christian-Albrechts-University of Kiel, Department of Food Economics and Consumption Studies.
    8. Colin Vance, 2006. "Marginal Effects and Significance Testing with Heckman’s Sample Selection Model: A Methodological Note," RWI Discussion Papers 0039, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
    9. Joel Stiebale & Frank Reize, 2008. "The Impact of FDI on Innovation in Target Firms," Ruhr Economic Papers 0050, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    10. Stiebale, Joel & Reize, Frank, 2011. "The impact of FDI through mergers and acquisitions on innovation in target firms," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 155-167, March.
    11. Vance, Colin & Hedel, Ralf, 2006. "On the Link between Urban Form and Automobile Use - Evidence from German Survey Data," RWI Discussion Papers 48, RWI - Leibniz-Institut für Wirtschaftsforschung.
    12. Arrazola, María & de Hevia, José, 2008. "Three measures of returns to education: An illustration for the case of Spain," Economics of Education Review, Elsevier, vol. 27(3), pages 266-275, June.
    13. Colin Vance & Ralf Hedel, 2008. "On the Link Between Urban Form and Automobile Use: Evidence from German Survey Data," Land Economics, University of Wisconsin Press, vol. 84(1), pages 51-65.
    14. Rodrigo García Arancibia, 2013. "Curvas de Engel de alimentos fuera del hogar según circunstancia de consumo. el caso de Argentina," REVISTA CUADERNOS DE ECONOMÍA, UN - RCE - CID, May.
    15. Akay, Alpaslan & Tsakas, Elias, 2006. "Second Order Approximation for the Average Marginal Effect of Heckman's Two Step Procedure," Working Papers in Economics 239, University of Gothenburg, Department of Economics.
    16. repec:zbw:rwirep:0050 is not listed on IDEAS
    17. Thiele Silke, 2010. "Erhöhung der Mehrwertsteuer für Lebensmittel: Budget- und Wohlfahrtseffekte für Konsumenten / Increase of the Value Added Tax (VAT): Budget- and Welfare- Effects for Consumers," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(1), pages 115-130, February.
    18. Justo Manrique & Helen H. Jensen, 2001. "Spanish Household Demand for Seafood," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(3), pages 23-37.
    19. Stiebale, Joel & Reize, Frank, 2008. "The Impact of FDI on Innovation in Target Firms," Ruhr Economic Papers 50, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    20. Thiele, Silke, 2008. "Elastizitäten der Nachfrage privater Haushalte nach Nahrungsmitteln – Schätzung eines AIDS auf Basis der Einkommens- und Verbrauchsstichprobe 2003," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 57(5).
    21. Baldwin, John R. & Sabourin, David, 2004. "The Effect of Changing Technology Use on Plant Performance in the Canadian Manufacturing Sector," Economic Analysis (EA) Research Paper Series 2004020e, Statistics Canada, Analytical Studies Branch.

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