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    Heterogeneity in ordered choice models: A review with applications to self-assessed health

    40009.pdf (707.9Kb)
    Access Status
    Open access
    Authors
    Greene, W.
    Harris, Mark
    Hollingsworth, B.
    Weterings, T.
    Date
    2012
    Type
    Working Paper
    
    Metadata
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    Citation
    Greene, William and Harris, Mark N. and Hollingsworth, Bruce and Weterings, Timothy A. 2012. Heterogeneity in ordered choice models: A review with applications to self-assessed health, Centre for Research in Applied Economics Working Paper Series: no. 05052012, Curtin University, School of Economics and Finance.
    School
    School of Economics and Finance
    URI
    http://hdl.handle.net/20.500.11937/40029
    Collection
    • Curtin Research Publications
    Abstract

    Discrete variables that have an inherent sense of ordering across outcomes are commonly found in large datasets available to many economists, and are often the focus of research. However, assumptions underlying the standard Ordered Probit (which is usually used to analyse such variables) are not always justied by the data. This study provides a review of the ways in which the Ordered Probit might be extended to account for additional heterogeneity. Diering from other reviews in scope, application and relevance in economic settings, a series of issues pertaining to choices of variables, and the economic assumptions underlying each model are discussed in the context of measuring the underlying health of respondents. The models are applied to a wave of the Household, Income and Labour Dynamics in Australia survey, in order to check the appropriateness of such assumptions in an applied context.

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