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The Identification & Economic Content of Ordered Choice Models with Stochastic Thresholds

Author

Listed:
  • Flavio Cunha
  • James J. Heckman
  • Salvador Navarro

Abstract

This paper extends the widely used ordered choice model by introducing stochastic thresholds and interval-specific outcomes. The model can be interpreted as a general- ization of the GAFT (MPH) framework for discrete duration data that jointly models durations and outcomes associated with different stopping times. We establish con- ditions for nonparametric identification. We interpret the ordered choice model as a special case of a general discrete choice model and as a special case of a dynamic discrete choice model.

Suggested Citation

  • Flavio Cunha & James J. Heckman & Salvador Navarro, 2007. "The Identification & Economic Content of Ordered Choice Models with Stochastic Thresholds," Working Papers 200726, Geary Institute, University College Dublin.
  • Handle: RePEc:ucd:wpaper:200726
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    File URL: http://www.ucd.ie/geary/static/publications/workingpapers/GearyWp200726.pdf
    File Function: Revised version, 2007
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    References listed on IDEAS

    as
    1. Matzkin, Rosa L., 1986. "Restrictions of economic theory in nonparametric methods," Handbook of Econometrics,in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 42, pages 2523-2558 Elsevier.
    2. Geert Ridder, 1990. "The Non-Parametric Identification of Generalized Accelerated Failure-Time Models," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 167-181.
    3. Edward Vytlacil, 2006. "Ordered Discrete-Choice Selection Models and Local Average Treatment Effect Assumptions: Equivalence, Nonequivalence, and Representation Results," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 578-581, August.
    4. Heckman, James J. & Navarro, Salvador, 2007. "Dynamic discrete choice and dynamic treatment effects," Journal of Econometrics, Elsevier, pages 341-396.
    5. James J. Heckman, 1974. "Effects of Child-Care Programs on Women's Work Effort," NBER Chapters,in: Marriage, Family, Human Capital, and Fertility, pages 136-169 National Bureau of Economic Research, Inc.
    6. Edward C. Prescott & Michael Visscher, 1977. "Sequential Location among Firms with Foresight," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 378-393, Autumn.
    7. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
    8. Paul J. Devereux & Robert A. Hart, 2010. "Forced to be Rich? Returns to Compulsory Schooling in Britain," Economic Journal, Royal Economic Society, vol. 120(549), pages 1345-1364, December.
    9. James J. Heckman & Vytlacil, Edward J., 2007. "Econometric Evaluation of Social Programs, Part I: Causal Models, Structural Models and Econometric Policy Evaluation," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 70 Elsevier.
    10. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, pages 473-522.
    11. Matzkin, Rosa L, 1992. "Nonparametric and Distribution-Free Estimation of the Binary Threshold Crossing and the Binary Choice Models," Econometrica, Econometric Society, vol. 60(2), pages 239-270, March.
    12. James J. Heckman & Sergio Urzua & Edward Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 389-432, August.
    13. Abbring, Jaap H. & Heckman, James J., 2007. "Econometric Evaluation of Social Programs, Part III: Distributional Treatment Effects, Dynamic Treatment Effects, Dynamic Discrete Choice, and General Equilibrium Policy Evaluation," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 72 Elsevier.
    14. Martin Feldstein, 1983. "Behavioral Simulation Methods in Tax Policy Analysis," NBER Books, National Bureau of Economic Research, Inc, number feld83-2.
    15. Feldstein, Martin (ed.), 1983. "Behavioral Simulation Methods in Tax Policy Analysis," National Bureau of Economic Research Books, University of Chicago Press, edition 0, number 9780226240848.
    16. James J. Heckrnan, 1974. "Effects of Child-Care Programs on Women's Work Effort," NBER Chapters,in: Economics of the Family: Marriage, Children, and Human Capital, pages 491-524 National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Heckman, James J. & Urzúa, Sergio, 2010. "Comparing IV with structural models: What simple IV can and cannot identify," Journal of Econometrics, Elsevier, vol. 156(1), pages 27-37, May.
    2. Powdthavee, Nattavudh, 2009. "Ill-health as a household norm: Evidence from other people's health problems," Social Science & Medicine, Elsevier, pages 251-259.
    3. Stefan Boes, 2007. "Nonparametric Analysis of Treatment Effects in Ordered Response Models," SOI - Working Papers 0709, Socioeconomic Institute - University of Zurich.
    4. Stefan Boes, 2013. "Nonparametric analysis of treatment effects in ordered response models," Empirical Economics, Springer, pages 81-109.
    5. Corrado, L. & Weeks, M., 2010. "Identification Strategies in Survey Response Using Vignettes," Cambridge Working Papers in Economics 1031, Faculty of Economics, University of Cambridge.
    6. Jaap H. Abbring, 2010. "Identification of Dynamic Discrete Choice Models," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 367-394, September.
    7. repec:spr:empeco:v:53:y:2017:i:3:d:10.1007_s00181-016-1160-y is not listed on IDEAS
    8. Jane Cooley Fruehwirth & Salvador Navarro & Yuya Takahashi, 2016. "How the Timing of Grade Retention Affects Outcomes: Identification and Estimation of Time-Varying Treatment Effects," Journal of Labor Economics, University of Chicago Press, vol. 34(4), pages 979-1021.
    9. Juliet Elu & Gregory Price, 2015. "Consumer’s Surplus with a Racial Apology? Black Relative to Non-Black Inequality in the Welfare Gains of Fuel-Efficient Cars and Trucks," The Review of Black Political Economy, Springer;National Economic Association, pages 135-154.
    10. Heckman, James J. & Humphries, John Eric & Veramendi, Gregory, 2016. "Dynamic treatment effects," Journal of Econometrics, Elsevier, vol. 191(2), pages 276-292.

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    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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