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Copula bivariate probit models: with an application to medical expenditures


Winkelmann, Rainer (2012). Copula bivariate probit models: with an application to medical expenditures. Health Economics, 21(12):1444-1455.

Abstract

The bivariate probit model is frequently used for estimating the effect of an endogenous binary regressor (the ‘treatment’) on a binary health outcome variable. This paper discusses simple modifications that maintain the probit assumption for the marginal distributions while introducing non-normal dependence using copulas. In an application of the copula bivariate probit model to the effect of insurance status on the absence of ambulatory health care expenditure, a model based on the Frank copula outperforms the standard bivariate probit model.

Abstract

The bivariate probit model is frequently used for estimating the effect of an endogenous binary regressor (the ‘treatment’) on a binary health outcome variable. This paper discusses simple modifications that maintain the probit assumption for the marginal distributions while introducing non-normal dependence using copulas. In an application of the copula bivariate probit model to the effect of insurance status on the absence of ambulatory health care expenditure, a model based on the Frank copula outperforms the standard bivariate probit model.

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9 citations in Web of Science®
15 citations in Scopus®
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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
Language:English
Date:December 2012
Deposited On:13 Jun 2012 09:59
Last Modified:07 Dec 2017 14:24
Publisher:Wiley-Blackwell
ISSN:1057-9230
Free access at:Related URL. An embargo period may apply.
Publisher DOI:https://doi.org/10.1002/hec.1801

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