Econometrics-I-13

= household nominal monthly net income in german

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Unformatted text preview: = household nominal monthly net income in German marks / 10000 . (4 observations with income=0 were dropped) HHKIDS = children under age 16 in the household = 1; otherwise = 0 EDUC = years of schooling AGE = age in years MARRIED = marital status EDUC = years of education ˜˜˜˜˜˜™ ™ 53/61 Part 13: Endogeneity A study of moral hazard Riphahn, Wambach, Million: “Incentive Effects in the Demand for Healthcare” Journal of Applied Econometrics, 2003 ˜˜˜˜˜˜˜ ™ 54/61 Part 13: Endogeneity Evidence of Moral Hazard? ˜˜˜˜˜˜˜ ˜™ 55/61 Part 13: Endogeneity Regression Study ˜˜˜˜˜˜˜ ˜™ 56/61 Part 13: Endogeneity Endogenous Dummy Variable p Doctor Visits = f(Age, Educ, Health, Presence of Insurance, Other unobservables ) p Insurance = f(Expected Doctor Visits, Other unobservables ) ˜˜˜˜˜˜˜ ˜™ 57/61 Part 13: Endogeneity Approaches p (Parametric) Control Function: Build a structural model for the two variables (Heckman) p (Semiparametric) Instrumental Variable: Create an instrumental variable for the dummy variable (Barnow/Cain/ Goldberger, Angrist, Current generation of researchers) p (?) Propensity Score Matching (Heckman et al., Becker/Ichino, Many recent researchers) ˜˜˜˜˜˜˜ ˜™ 58/61 Part 13: Endogeneity Heckman’s Control Function Approach p Y = xβ + δT + E[ε|T] + {ε - E[ε|T]} p λ = E[ε|T] , computed from a model for whether T = 0 or 1 Magnitude = 11.1200 is nonsensical in this context. ˜˜˜˜˜˜˜ ˜™ 59/61 Part 13: Endogeneity Instrumental Variable Approach Construct a prediction for T using only the exogenous information Use 2SLS using this instrumental variable. Magnitude = 23.9012 is also nonsensical in this context. ˜˜˜˜˜˜˜ ˜™ 60/61 Part 13: Endogeneity Propensity Score Matching p Create a model for T that produces probabilities for T=1: “Propensity Scores” p Find people with the same propensity score – some with T=1, some with T=0 p Compare number of doctor visits of those with T=1 to those with T=0. ˜˜˜˜˜˜˜ ˜ 61/61...
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= household nominal monthly net income in German marks...

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