Copula bivariate probit models: with an application to medical expenditures

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 expen- diture, a model based on the Frank copula outperforms the standard bivariate probit model.Bivariate probit, binary endogenous regressor, Frank copula, Clayton copula

Health Care Reform and the Number of Doctor Visits – An Econometric Analysis

The paper evaluates the German health care reform of 1997, using the individual number of doctor visits as outcome measure and data from the German Socio- Economic Panel for the years 1995-1999. A number of modified count data models allow to estimate the effect of the reform in different parts of the distribution. The overall effect of the reform was a 10 percent reduction in the number of doctor visits. The effect was much larger in the lower part of the distribution than in the upper part.co-payment, moral hazard, count data, probit-Poisson-log-normal model

Parental Separation and Well-Being of Youths

This paper uses recent data for Germany and a new outcome variable to assess the consequences of parental separation on the well-being of youths. In particular, it is considered how subjective well-being, elicited from an ordinal 11-point general life satisfaction question, differs between youths living in intact and non-intact families, holding many other potential determinants of well-being constant using ordered probit regressions. The main finding of this study is that living in a non-intact family has not the hypothesised large negative effect on child well-being.child welfare, educational attainment, happiness, German Socio-Economic Panel

Conspicuous consumption and satisfaction

Traditional tools of welfare economics identify the envy-related welfare loss from conspicuous consumption only under very strong assumptions. Measured income and life satisfaction offers an alternative for estimating such consumption externalities. The approach is developed in the context of luxury car consumption (Ferraris and Porsches) in Switzerland. Results from household panel data and fixed effects panel regressions suggest that the prevalence of luxury cars in the municipality of residence has a negative impact on own income satisfaction.Ferrari, Porsche, status, consumption externality, Swiss Household Panel

Subjective Well-Being and the Family: Results from an Ordered Probit Model with Multiple Random Effects

The previous literature on the determinants of individual well-being has failed to fully account for the interdependencies in well-being at the family level. This paper develops an ordered probit model with multiple random effects that allows to identify the intrafamily correlation in well-being. The parameters of the model can be estimated with panel data using Maximum Marginal Likelihood. The approach is illustrated in an application using panel data for the period 1984-1997 from the German Socio-Economic Panel in which both inter-generational and intra-marriage correlations in well-being are estimated.ordered probit model, error components, german socio-economic panel

How Did the German Health Care Reform of 1997 Change the Distribution of the Demand for Health Services?

I consider the problem of evaluating the effect of a health care reform on the demand for doctor visits when the effect is potentially different in different parts of the outcome distribution. Quantile regression is a useful technique for studying such heterogeneous treatment effects. Recent progree has been made to extend such methods to applications with a count dependent variable. An analysis of a 1997 health care reform in Germany shows the benefit of the approach: lower quantiles, such as the 25 percent quantile, fell by substantially larger amounts than what would have been predicted based on Poisson or negative binomial models.heterogeneous treatment effect, count data, quantile regression, Poisson model

Co-Payments for Prescription Drugs and the Demand for Doctor Visits - Evidence from a Natural Experiment

The German health care reform of 1997 provides a natural experiment for evaluating the price sensitivity of demand for physicians’ services. As part of the reform, copayments for prescription drugs were increased by up to 200 percent. However, certain groups of people were exempted from the increase, providing a natural control group against which the changed demand for physicians’ services of the treated, those subject to increased co-payments, can be assessed. The differences-in-differences estimates indicate that increased co-payments reduced the number of doctor visits by about 10 percent on average.co-payment, moral hazard, count data, Poisson regression, differences-indifferences model

Happiness Functions with Preference Interdependence and Heterogeneity: The Case of Altruism within the Family

This study investigates the prevalence and extent of altruism by examining the relationship between parents' and their adult children's subjective well-being in a data set extracted from the German Socio-Economic Panel. In order to segregate the share of parents with altruistic preferences from those who are selfish, we estimate a finite mixture regression model. We control for various sources of potential bias by taking advantage of the data's panel structure. To validate our modeling approach we show that predicted altruists indeed make higher average transfer payments.altruism, subjective well-being, finite mixture regression models

The Apple Falls Increasingly Far: Parent-Child Correlation in Schooling and the Growth of Post-Secondary Education in Switzerland

In this paper, we analyze the completed highest education degree of two birth cohorts (1934-1943 and 1964-1973) in Switzerland, using data from the 1999 wave of the Swiss Household Panel. As expected, the fraction of tertiary graduates has increased over time, for women more so than for men. Also, the educational attainment depends strongly on the educational attainment of parents. We then decompose the overall trend into a parental background effect, a general expansion effect and a distribution effect. For women in particular, we find that a substantial fraction of the overall increase in participation in tertiary education can be explained by the fact that the gap in participation rates between women with lowly educated parents and women with highly educated parents has narrowed. We then investigate the role of financial constraints in explaining these trends. Although the number of individuals suffering financial hardship during youth has declined over time, logit models show that financial problems have become more important as an impediment for higher education.education, schooling, Switzerland

Specification and Estimation of Rating Scale Models: With an Application to the Determinants of Life Satisfaction

Rating variables indicate the extent to which a quality is present, or absent, in a unit of observation. In this paper, we discuss a class of non-linear regression models for rating dependent variables and their estimation by parametric and semiparametric methods. An application to life satisfaction illustrates the main differences between the Rating Scale Model and ordinary least squares.rating variables, non-linear least squares, quasi-maximum likelihood, semiparametric least squares, subjective well-being