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

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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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    References listed on IDEAS

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