Significance Analysis for Pairwise Variable Selection in Classification

The goal of this article is to select important variables that can distinguish one class of data from another. A marginal variable selection method ranks the marginal effects for classification of individual variables, and is a useful and efficient approach for variable selection. Our focus here is to consider the bivariate effect, in addition to the marginal effect. In particular, we are interested in those pairs of variables that can lead to accurate classification predictions when they are viewed jointly. To accomplish this, we propose a permutation test called Significance test of Joint Effect (SigJEff). In the absence of joint effect in the data, SigJEff is similar or equivalent to many marginal methods. However, when joint effects exist, our method can significantly boost the performance of variable selection. Such joint effects can help to provide additional, and sometimes dominating, advantage for classification. We illustrate and validate our approach using both simulated example and a real glioblastoma multiforme data set, which provide promising results.Comment: 28 pages, 7 figure

Marginal and Interaction Effects in Ordered Response Models

In discrete choice models the marginal effects of a variable that is interacted with another variable and the interaction term differ from the marginal effect of a variable that is not interacted with any variable. Standard software incorrectly estimates these marginal effects. I provide correct formulas for ordered response models that can be extended to other discrete choice models and an example using household survey data on food security in Bangladesh. Results show that marginal effects of the variables interacted and interaction term are estimated by standard software (such as STATA® 10) with large error and even with wrong sign

Estimating Marginal Returns to Education

This paper estimates the marginal returns to college for individuals induced to enroll in college by different marginal policy changes. The recent instrumental variables literature seeks to estimate this parameter, but in general it does so only under strong assumptions that are tested and found wanting. We show how to utilize economic theory and local instrumental variables estimators to estimate the effect of marginal policy changes. Our empirical analysis shows that returns are higher for individuals more likely to attend college. We contrast the returns to well-defined marginal policy changes with IV estimates of the return to schooling. Some marginal policy changes inducing students into college produce very low returns.marginal treatment effect, returns to schooling, marginal return, average return

On the Treatment of Income Tax Rates in Empirical Analysis of Tax Evasion

In this paper, it is argued that average tax rates exert an influence on income tax evasion separate from, and opposite to that of marginal tax rates. Failure to account for this effect in empirical evasion models biases the parameter estimate of the marginal rate in a predictable manner. Evidence from an aggregate empirical model of evasion in the US indicates that the marginal tax rate is positively related to evasion, whereas the average tax rate is negatively related. Further, exclusion of the average rate from the model does in fact bias the parameter estimate of the marginal tax rate

Do Financial Incentives Affect Fertility?

This paper investigates how fertility responds to changes in the price of a marginal child and in household income. We construct a large, individual-level panel data set of married Israeli women during the period 1999–2005 that contains fertility histories and detailed controls. We exploit variation in Israel’s child subsidy program to identify changes in the price of a marginal child (using changes in the subsidy for a marginal child) and to instrument for household income (using changes in the subsidy for infra-marginal children). We find a significant and positive price effect on fertility: the mean level of marginal child subsidy produces a 7.8 percent increase in fertility. There is a positive effect within all religious and ethnic subgroups, including the ultra-Orthodox Jewish population, whose social and religious norms discourage family planning. There is also a significant price effect on fertility among women who are close to the end of their lifetime fertility, suggesting that at least part of the price effect is due to a reduction in total fertility. As expected, the child subsidy has no effect in the upper range of the income distribution. Finally, consistent with the predictions of Becker (1960) and Becker and Tomes (1976), we find that the income effect is small in magnitude and is negative at low income levels and positive at high levels.

A test of collusive behavior based on incentives

This paper proposes a novel collusion test based on the analysis of incentives faced by each firm in a colluding coalition. In fact, once collusion is in effect, each colluding firm faces the incentive to secretly deviate from the agreement, since it thereby increases its profits, although the colluding firms’ joint profit decreases. Thus, in a colluding coalition each firm has marginal revenues, calculated with Nash conjectures, which are larger than its marginal costs. The collusion test is based on the rejection of the null hypothesis that the firm marginal revenues with Nash conjectures are equal to or less than its marginal costs.info:eu-repo/semantics/publishedVersio

New evidence on taxes and portfolio choice

Identifying the effect of differential taxation on portfolio allocation requires exogenous variation in marginal tax rates. Marginal tax rates vary with income, but income surely affects portfolio choice directly. In systems of individual taxation – like Canada’s – couples with the same household income can face different effective tax rates on capital income when labor income is distributed differently within households. Using this source of variation we find statistically significant but economically modest responses to taxation. In a “placebo” test, using data from the U.S. (which has joint taxation), we find no effect of the intra-household distribution of labor income on portfolios

Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin

This paper develops methods for evaluating marginal policy changes. We characterize how the effects of marginal policy changes depend on the direction of the policy change, and show that marginal policy effects are fundamentally easier to identify and to estimate than conventional treatment parameters. We develop the connection between marginal policy effects and the average effect of treatment for persons on the margin of indifference between participation in treatment and nonparticipation, and use this connection to analyze both parameters. We apply our analysis to estimate the effect of marginal changes in tuition on the return to going to college.marginal treatment effect, effects of marginal policy changes, marginal policy relevant treatment effect, average marginal treatment effect

A New Direction for the Payment of Milk: Technological and Seasonality Considerations in Multiple Component Milk Pricing of Milk (Liquid and Manufacturing) for a Diversifying Dairy Industry

End of project reportThe main objectives of this study were to compare a Multiple Component Pricing system with the current milk pricing practice in Ireland and to estimate the marginal values of the three main milk components (fat, protein and lactose) in the context of the Irish milk processing industry. A representative linear programming model of an average Irish milk processor was developed in order to determine the marginal values of the milk components and to compare the value of milk under the Multiple Component Pricing system with the value under the current milk pricing practice. This study also examined the effect of product mix, milk supply and milk composition on the marginal value of the milk components