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Ordered response models


Boes, Stefan; Winkelmann, Rainer (2006). Ordered response models. In: Hübler, O; Frohn, J. Modern econometric analysis. Berlin: Springer, 167-182.

Abstract

We discuss regression models for ordered responses, such as ratings of bonds, schooling attainment, or measures of subjective well-being. Commonly used models in this context are the ordered logit and ordered probit regression models. They are based on an underlying latent model with single index function and constant thresholds. We argue that these approaches are overly restrictive and preclude a flexible estimation of the effect of regressors on the discrete outcome probabilities. For example, the signs of the marginal probability effects can only change once when moving from the smallest category to the largest one. We then discuss several alternative models that overcome these limitations. An application illustrates the benefit of these alternatives.

We discuss regression models for ordered responses, such as ratings of bonds, schooling attainment, or measures of subjective well-being. Commonly used models in this context are the ordered logit and ordered probit regression models. They are based on an underlying latent model with single index function and constant thresholds. We argue that these approaches are overly restrictive and preclude a flexible estimation of the effect of regressors on the discrete outcome probabilities. For example, the signs of the marginal probability effects can only change once when moving from the smallest category to the largest one. We then discuss several alternative models that overcome these limitations. An application illustrates the benefit of these alternatives.

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Additional indexing

Item Type:Book Section, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:2006
Deposited On:26 Feb 2010 12:17
Last Modified:08 Oct 2016 07:15
Publisher:Springer
ISBN:978-3-540-32692-2
Additional Information:Reprint of an article originally published in the journal "Allgemeines Statistisches Archiv", 90(1), 165-180.
Related URLs:http://www.recherche-portal.ch/ZAD:default_scope:ebi01_prod005246528 (Library Catalogue)
Permanent URL: https://doi.org/10.5167/uzh-32579

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