IDEAS home Printed from
   My bibliography  Save this paper

OLS and Tobit Estimates: When is Substitution Defensible Operationally?


  • Wilson, Clevo
  • Tisdell, Clement A.


Field data are used to illustrate that, other things constant, regression results using Ordinary Least Squares (OLS) converge to Tobit estimates as the number of zeros in the regressand decrease. Tobit estimates are theoretically superior to OLS estimates when using censored data. However, if little difference exists between OLS and Tobit estimates, OLS may be operationally acceptable. OLS may even be optimal in a bounded rationality sense because the extra cost of using Tobit analysis may be less than the extra benefits from a very slight increase in accuracy.

Suggested Citation

  • Wilson, Clevo & Tisdell, Clement A., 2002. "OLS and Tobit Estimates: When is Substitution Defensible Operationally?," Economic Theory, Applications and Issues Working Papers 90519, University of Queensland, School of Economics.
  • Handle: RePEc:ags:uqseet:90519

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Oxford University Press, vol. 43(2), pages 217-235.
    2. R. E. Caves & M. E. Porter, 1977. "From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deterrence to New Competition," The Quarterly Journal of Economics, Oxford University Press, vol. 91(2), pages 241-261.
    3. Lasselle, Laurence & Svizzero, Serge & Tisdell, Clement Allan, 2001. "Diversity, Globalisation and Market Stability," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 54(3), pages 385-399.
    4. Gallagher, Matthew, 1993. "Niche Overlap and Limiting Similarity: An Ecological Approach to the Theory of the Firm," Journal of Evolutionary Economics, Springer, vol. 3(1), pages 63-77, February.
    5. B Ilbery & M Kneafsey, 1999. "Niche markets and regional speciality food products in Europe: towards a research agenda," Environment and Planning A, Pion Ltd, London, vol. 31(12), pages 2207-2222, December.
    6. Bradburd, Ralph M & Ross, David R, 1989. "Can Small Firms Find and Defend Strategic Niches? A Test of the Porter Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 258-262, May.
    7. Gernot Grabher & David Stark, 1997. "Organizing Diversity: Evolutionary Theory, Network Analysis and Postsocialism," Regional Studies, Taylor & Francis Journals, vol. 31(5), pages 533-544.
    8. Levinthal, Daniel A, 1998. "The Slow Pace of Rapid Technological Change: Gradualism and Punctuation in Technological Change," Industrial and Corporate Change, Oxford University Press, vol. 7(2), pages 217-247, June.
    9. Clem Tisdell, 1999. "Diversity And Economic Evolution: Failures Of Competitive Economic Systems," Contemporary Economic Policy, Western Economic Association International, vol. 17(2), pages 156-165, April.
    10. B Ilbery & M Kneafsey, 1999. "Niche Markets and Regional Speciality Food Products in Europe: Towards a Research Agenda," Environment and Planning A, , vol. 31(12), pages 2207-2222, December.
    11. Hirshleifer, Jack, 1977. "Economics from a Biological Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 20(1), pages 1-52, April.
    12. Hodgson, Geoffrey M., 1997. "Economics and the return to Mecca: The recognition of novelty and emergence," Structural Change and Economic Dynamics, Elsevier, vol. 8(4), pages 399-412, October.
    13. Hannon, Bruce, 1997. "The use of analogy in biology and economics: From biology to economics, and back," Structural Change and Economic Dynamics, Elsevier, vol. 8(4), pages 471-488, October.
    14. Pepall, Lynne, 1992. "Strategic Product Choice and Niche Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(2), pages 397-417, Summer.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Mottaleb, Khondoker Abdul & Mohanty, Samarendu & Hoang, Hoa Thi Khanh & Rejesus, Roderick M., 2013. "The effects of natural disasters on farm household income and expenditures: A study on rice farmers in Bangladesh," Agricultural Systems, Elsevier, vol. 121(C), pages 43-52.
    2. Lo Duca, Marco & Nicoletti, Giulio & Vidal Martínez, Ariadna, 2016. "Global corporate bond issuance: What role for US quantitative easing?," Journal of International Money and Finance, Elsevier, vol. 60(C), pages 114-150.
    3. repec:eee:ecofin:v:43:y:2018:i:c:p:54-70 is not listed on IDEAS
    4. Philip Wilms & Job Swank & Jakob de Haan, 2014. "Determinants of the real impact of banking crises: A review and new evidence," DNB Working Papers 437, Netherlands Central Bank, Research Department.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:uqseet:90519. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.