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Econometric analysis of ratings : with an application to health and wellbeing


Studer, Raphael; Winkelmann, Rainer (2017). Econometric analysis of ratings : with an application to health and wellbeing. Swiss Journal of Economics and Statistics = Schweizerische Zeitschrift für Volkswirtschaft und Statistik:Epub ahead of print.

Abstract

We propose a new non-linear regression model for rating dependent variables. The rating scale model accounts for the upper and lower bounds of ratings. Parametric and semi-parametric estimation is discussed. An application investigates the relationship between stated health satisfaction and physical and mental health scores derived from self-reports of various health impairments, using data from the German Socio-Economic Panel. We compare our new approach to modeling ratings with ordinary least squares (OLS). In one specification, OLS average effects exceed that from our rating scale model by up to 50 percent. Also, OLS in-sample mean predictions violate the upper bound of the dependent variable in a number of cases.

Abstract

We propose a new non-linear regression model for rating dependent variables. The rating scale model accounts for the upper and lower bounds of ratings. Parametric and semi-parametric estimation is discussed. An application investigates the relationship between stated health satisfaction and physical and mental health scores derived from self-reports of various health impairments, using data from the German Socio-Economic Panel. We compare our new approach to modeling ratings with ordinary least squares (OLS). In one specification, OLS average effects exceed that from our rating scale model by up to 50 percent. Also, OLS in-sample mean predictions violate the upper bound of the dependent variable in a number of cases.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Quasi maximum likelihood; bounded dependent variable; German Socio-Economic Panel
Language:English
Date:2017
Deposited On:18 Jan 2017 17:23
Last Modified:18 Jan 2017 17:23
Publisher:Schweizerische Gesellschaft für Volkswirtschaft und Statistik / Verlag Peter Lang
ISSN:0303-9692
Free access at:Publisher DOI. An embargo period may apply.
Related URLs:http://www.sjes.ch/published_d.php

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