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Probit Models with Binary Endogenous Regressors

Author

Listed:
  • Jacob Nielsen Arendt

    (Department of Business and Economics, University of Southern Denmark)

  • Anders Holm

    (Department of Sociology, University of Copenhagen)

Abstract

Sample selection and endogeneity are frequent causes of biases in non-experimental empirical studies. In binary models a standard solution involves complex multivariate models. A simple approximation has been shown to work well in bivariate models. This paper extends the approximation to a trivariate model. Simulations show that the approximation outperforms full maximum likelihood while a least squares approximation may be severely biased. The methods are used to estimate the influence of trust in the parliament and politicians on voting- propensity. No previous studies have allowed for endogeneity of trust on voting and it is shown to severely affect the results.

Suggested Citation

  • Jacob Nielsen Arendt & Anders Holm, 2006. "Probit Models with Binary Endogenous Regressors," CAM Working Papers 2006-06, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  • Handle: RePEc:kud:kuieca:2006_06
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    File URL: http://www.econ.ku.dk/cam/wp0910/wp0406/2006-06.pdf/
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    Cited by:

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    2. Kenjiro Yagura, 2009. "Safety Net Perception and its Effects on Household Investment in Developing Countries: Chemical Fertilizer Input by Cambodian Farmers," Oxford Development Studies, Taylor & Francis Journals, vol. 37(4), pages 363-395.
    3. Silvia Magri, 2014. "Does issuing equities help R&D activity? Evidence from unlisted Italian high-tech manufacturing firms," Temi di discussione (Economic working papers) 978, Bank of Italy, Economic Research and International Relations Area.
    4. Demidova, Olga, 2011. "Modeling of public trust in basic social and political institutions: A comparative econometric analysis," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 21(1), pages 114-132.
    5. Damien S. Eldridge & Ilke Onur & Malathi Velamuri, 2017. "The impact of private hospital insurance on the utilization of hospital care in Australia," Applied Economics, Taylor & Francis Journals, vol. 49(1), pages 78-95, January.
    6. Silvia Magri, 2014. "Does issuing equity help R&D activity? Evidence from unlisted Italian high-tech manufacturing firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 23(8), pages 825-854, November.
    7. Ben Aoun - Peltier, Leila & Vicente Cuervo, Maria Rosalia, 2012. "E-commerce diffusion: exploring the determinants of the adoption and extent of usage at firm-level," MPRA Paper 49333, University Library of Munich, Germany.
    8. Serden Özcan & Toke Reichstein, 2009. "Transition to Entrepreneurship from the Public Sector: Predispositional and Contextual Effects," Management Science, INFORMS, vol. 55(4), pages 604-618, April.
    9. Klein, Thilo, 2017. "Intermediation in peer-to-peer markets: Evidence from auctions for personal loans," ZEW Discussion Papers 17-073, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    10. Cristina Vilaplana Prieto & Sergi Jiménez-Martín, 2015. "Unmet needs in formal care: kindling the spark for caregiving behavior," International Journal of Health Economics and Management, Springer, vol. 15(2), pages 153-184, June.
    11. Cristian Barra & Ornella Wanda Maietta & Roberto Zotti, 2017. "First, Second and Third Tier Universities: Academic Excellence, Local Knowledge Spillovers and Innovation in Europe," CSEF Working Papers 468, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    12. Solomon Asfaw & Dagmar Mithöfer & Hermann Waibel, 2009. "EU Food Safety Standards, Pesticide Use and Farm-level Productivity: The Case of High-value Crops in Kenya," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(3), pages 645-667.
    13. repec:bla:jageco:v:68:y:2017:i:3:p:749-780 is not listed on IDEAS
    14. Ornella W. Maietta & Cristian Barra & Roberto Zotti, 2017. "Innovation and University-Firm R&D Collaboration in the European Food and Drink Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(3), pages 749-780, September.
    15. Simona Iammarino & Elisabetta Marinelli, 2015. "Education-Job (Mis)Match and Interregional Migration: Italian University Graduates' Transition to Work," Regional Studies, Taylor & Francis Journals, vol. 49(5), pages 866-882, May.
    16. David Hensher, 2013. "Exploring the relationship between perceived acceptability and referendum voting support for alternative road pricing schemes," Transportation, Springer, vol. 40(5), pages 935-959, September.

    More about this item

    Keywords

    endogeneity; multivariate probit; approximation; Monte Carlo simulation;

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