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Counts With An Endogenous Binary Regressor: A Series Expansion Approach

Author

Listed:
  • Andrés Romeu

    () (Universidad de Alicante)

  • Marcos Vera-Hernández

    () (Institute for Fiscal Studies)

Abstract

We propose an estimator for count data regression models where a binary regressor is endogenously determined. This estimator departs from previous approaches by using a flexible form for the conditional probability function of the counts. Using a Monte Carlo experiment we show that our estimator improves the fit and provides a more reliable estimate of the impact of regressors on the count when compared to alternatives which do restrict the mean to be linear-exponential. In an application to the number of trips by households in the US, we find that the estimate of the treatment effect obtained is considerably different from the one obtained under a linear-exponential mean specification.

Suggested Citation

  • Andrés Romeu & Marcos Vera-Hernández, 2004. "Counts With An Endogenous Binary Regressor: A Series Expansion Approach," Working Papers. Serie AD 2004-36, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:2004-36
    as

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    References listed on IDEAS

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    1. Martin Schellhorn, 2001. "The effect of variable health insurance deductibles on the demand for physician visits," Health Economics, John Wiley & Sons, Ltd., vol. 10(5), pages 441-456.
    2. Gallant, A. Ronald & Tauchen, George, 1997. "Estimation Of Continuous-Time Models For Stock Returns And Interest Rates," Macroeconomic Dynamics, Cambridge University Press, vol. 1(01), pages 135-168, January.
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    4. Ángel Marcos Vera-Hernández, 1999. "Duplicate coverage and demand for health care. The case of Catalonia," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 579-598.
    5. Donald S. Kenkel & Joseph V. Terza, 2001. "The effect of physician advice on alcohol consumption: count regression with an endogenous treatment effect," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(2), pages 165-184.
    6. Coulson, N Edward, et al, 1995. "Estimating the Moral-Hazard Effect of Supplemental Medical Insurance in the Demand for Prescription Drugs by the Elderly," American Economic Review, American Economic Association, vol. 85(2), pages 122-126, May.
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    8. John Mullahy, 1997. "Instrumental-Variable Estimation Of Count Data Models: Applications To Models Of Cigarette Smoking Behavior," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 586-593, November.
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    10. Gurmu, Shiferaw & Rilstone, Paul & Stern, Steven, 1998. "Semiparametric estimation of count regression models1," Journal of Econometrics, Elsevier, vol. 88(1), pages 123-150, November.
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    Citations

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    Cited by:

    1. Kevin E. Staub, 2009. "Simple tests for exogeneity of a binary explanatory variable in count data regression models," SOI - Working Papers 0904, Socioeconomic Institute - University of Zurich.
    2. repec:ebl:ecbull:v:3:y:2008:i:42:p:1-13 is not listed on IDEAS
    3. Matilde P. Machado & Ricardo Mora & Antonio Romero-Medina, 2012. "Can We Infer Hospital Quality From Medical Graduates’ Residency Choices?," Journal of the European Economic Association, European Economic Association, vol. 10(6), pages 1400-1424, December.
    4. Paulo Arvate & Vladimir Ponczek, 2008. "Municipality secession, voter’s preference and persistence of power," Working Papers 08_07, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.
    5. Toni Mora, 2008. "The relevance of satisfaction with coverage for health care utilization: evidence from Catalonia," Hacienda Pública Española, IEF, vol. 184(1), pages 99-116, April.
    6. Burda, Martin & Harding, Matthew & Hausman, Jerry, 2012. "A Poisson mixture model of discrete choice," Journal of Econometrics, Elsevier, vol. 166(2), pages 184-203.
    7. Hiroaki Masuhara, 2008. "Semi-nonparametric count data estimation with an endogenous binary variable," Economics Bulletin, AccessEcon, vol. 3(42), pages 1-13.

    More about this item

    Keywords

    Count data; Polynominal Poisson Expansions; Flexible Functional Form.;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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