Calculating marginal effects in models for zero expenditures in household budgets using a Heckman-type correction
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.
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Volume (Year): 29 (1997)
Issue (Month): 10 ()
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- Heien, Dale & Durham, Cathy, 1991. "A Test of the Habit Formation Hypothesis Using Household Data," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 189-99, May.
- James Tobin, 1956. "Estimation of Relationships for Limited Dependent Variables," Cowles Foundation Discussion Papers 3R, Cowles Foundation for Research in Economics, Yale University.
- Jensen, Helen H. & Kesavan, T. & Johnson, Stanley R., 1992. "Measuring the Impact of Health Awareness on Food Demand," Staff General Research Papers 11239, Iowa State University, Department of Economics.
- Heien, Dale & Wessells, Cathy Roheim, 1990. "Demand Systems Estimation with Microdata: A Censored Regression Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(3), pages 365-71, July.
- Lutz, Steven M. & Smallwood, David M. & Blaylock, James R. & Hama, Mary Y., 1992. "Changes in Food Consumption and Expenditures in American Households During the 1980's," Statistical Bulletin 154791, United States Department of Agriculture, Economic Research Service.
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