st: Re: [matstata@yahoo.com: censored reg w/ binary explanatory var that needs to be instrumented]

 From "Scott Merryman" To Subject st: Re: [matstata@yahoo.com: censored reg w/ binary explanatory var that needs to be instrumented] Date Sat, 28 Jun 2003 20:51:37 -0500

```----- Original Message -----
To: <statalist@hsphsun2.harvard.edu>
Sent: Friday, June 27, 2003 9:42 AM
Subject: st: [matstata@yahoo.com: censored reg w/ binary explanatory var
that needs to be instrumented]

> Matt Barens <matstata@yahoo.com> asked me to forward the following to the
> list:
>
> --------------------------------------------------------------------------
----
>
> Hello Statalisters, I have the following problem(s) and I was wondering if
> there was a way to deal with this in stata 7 (although if there is a way
to
> deal with it in stata 8 I would also be interested in finding out how).
>
> I want to do the following analysis. The dependent variable is dollar
amount
> in checking account. This is censored, because about 15% of the sample has
a
> missing value since they do not own a checking account. The main
explanatory
> variable I use and am interested in is whether the person owns a credit
card
> or not. Nonetheless, there is some potential endogeneity here (e.g. people
who
> spend more may both decide to hold a card and have more money in their
> checking accounts). I have the following 3 questions:
>
> 1. First, I have some variables that I could use to instrument for credit
card
> holding. However, it is a binary variable, so normally I would want to do
a
> probit in the first stage, but I dont think the ivreg command allows for
this.
> Do I just forget about probit?

I believe -treatreg-  can fit models where the first stage is binary and the
second stage is continuous.

> 2. Second, how does one do iv analysis in a censored regression?

Joe Harkness has written up an instrumental variable Tobit.  Try -findit
ivtobit- for more details.

Hope this helps,
Scott

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```