| By: |
Bernard M.S. van Praag (Universiteit van Amsterdam, CESifo, IZA, & SCHOLAR);
Ada Ferrer-i-Carbonell (Universiteit van Amsterdam, SCHOLAR, AIAS Amsterdam Institute of Labour Studies) |
| Abstract: |
In this paper we propose an alternative approach to the estimation of ordered
response models. We show that the Probit-method may be replaced by a simple
OLS-approach, called P(robit)OLS, without any loss of efficiency. This method
can be generalized to the analysis of panel data. For large-scale examples
with random fixed effects we found that computing time was reduced from 90
minutes to less than one minute. Conceptually, the method removes the gap
between traditional multivariate models and discrete variable models |
| Keywords: |
Categorical data; Ordered probit model; Ordered response models; Subjective data; Subjective well-being |
| JEL: |
C25 |
| Date: |
2006–05–22 |
| URL: |
http://d.repec.org/n?u=RePEc:dgr:uvatin:20060047&r=mst |