Estimating Fixed Effects: Perfect Prediction and Bias in Binary Response Panel Models, with an Application to the Hospital Readmissions Reduction Program

The maximum likelihood estimator for the regression coefficients, β, in a panel binary response model with fixed effects can be severely biased if N is large and T is small, a consequence of the incidental parameters problem. This has led to the development of conditional maximum likelihood estimators and, more recently, to estimators that remove the O(T–1) bias in β^. We add to this literature in two important ways. First, we focus on estimation of the fixed effects proper, as these have become increasingly important in applied work. Second, we build on a bias-reduction approach originally developed by Kosmidis and Firth (2009) for cross-section data, and show that in contrast to other proposals, the new estimator ensures finiteness of the fixed effects even in the absence of within-unit variation in the outcome. Results from a simulation study document favourable small sample properties. In an application to hospital data on patient readmission rates under the 2010 Affo

The 'Risk-Adjusted' Price-Concentration Relationship in Banking

Price-concentration studies in banking typically find a significant and negative relationship between consumer deposit rates (i.e., prices) and market concentration. This relationship implies that highly concentrated banking markets are "bad" for depositors. It also provides support for the Structure-Conduct-Performance hypothesis and rejects the Efficient-Structure hypothesis. However, these studies have focused almost exclusively on supply-side control variables and have neglected demand-side variables when estimating the reduced form price-concentration relationship. For example, previous studies have not included in their analysis bank-specific risk variables as measures of cross-sectional derived deposit demand. The authors find that when bank-specific risk variables are included in the analysis the magnitude of the relationship between deposit rates and market concentration decreases by over 50 percent. They offer an explanation for these results based on the correlation between a bank’s risk profile and the structure of the market in which it operates. These results suggest that it may be necessary to reconsider the well-established assumption that higher market concentration necessarily leads to anticompetitive deposit pricing behavior by commercial banks. This finding has direct implications for the antitrust evaluations of bank merger and acquisition proposals by regulatory agencies. And, in a more general sense, these results suggest that any Structure-Conduct-Performance-based study that does not explicitly consider the possibility of very different risk profiles of the firms analyzed may indeed miss a very important set of explanatory variables. And, thus, the results from those studies may be spurious

Assessing people with dementia participating in cognitive stimulation activities – A qualitative pilot video analysis exploring the importance of facilitating the participation

BACKGROUND: This pilot video analysis was part of a feasibility control study, which aimed to gain information about the size and variability of the changes in outcome measures to plan a substantive effect study. It compared a cognitive stimulation programme named Lifelong Learning with other existing dementia services. OBJECTIVE: The pilot video analysis explored how facilitation is performed, when assessing people with dementia with standardized measures, to ensure their participation in research. DESIGN: A test battery of five measures (Mini-Mental State Examination (MMSE), Quality of Life in Alzheimer's Disease Scale (QoL-AD), General Self-Efficacy Scale, Rosenberg Self-Esteem Scale and Hawthorn Friendship Scale) was used. Each assessment was video-recorded. The findings from a microanalysis of 10 videos are presented in this article. SETTING: The study involved 55 active participants with mild-to-moderate dementia in six municipalities in Northern Denmark. RESULTS: The identified themes related to supportive facilitation: Positive facilitator strategies; Creating a safe and comfortable environment; and to dilemmas in facilitation: Balancing multiple dilemmas and Balancing the MMSE test. DISCUSSION: Results are discussed in relation to using standardized measures. CONCLUSION: The quality of facilitation when using standardized measures is of great importance as it may influence the participant, the assessment and the answers given. The facilitation role needs to be thoroughly planned and executed with ethical consideration to improve the participation of vulnerable groups in research and ensure a person-centred approach. PATIENT OR PUBLIC CONTRIBUTION: The identified measures were chosen based upon previous qualitative results and user-involvement workshops with people with dementia