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From |
"Austin Nichols" <austinnichols@gmail.com> |

To |
statalist@hsphsun2.harvard.edu |

Subject |
Re: st: RE: Tobit coefficients |

Date |
Fri, 27 Jul 2007 15:12:54 -0400 |

Richard-- [I apologize in advance for the slim Stata content] The discussion in http://www.stata.com/statalist/archive/2007-04/msg00549.html is on point--note debt can be zero or negative (financial assets are negative debts). If you only look at the size of debt for those who have positive debts, you are looking at a weird subsample. Think of a person who has a bank account with $6K and student loan debt of $5K --their debt is $5000 even though their net worth is $1000 (they are lending the bank $6K). They can freely choose any debt amount between 0 and $5K with almost no real consequence aside from liquidity--the observed value may be no more than an accident of timing in check-writing rather than an outcome of consequence to be modeled. The bottom line is, there is no real point in looking at debt in isolation unless you've got a specific theoretical model which absolutely requires it, since it has not much meaning without looking at the rest of the balance sheet. Even in the case where assets should be ignored, I can't think of a model where debts of zero should be dropped, rather than modeled with e.g. -poisson- (one complication is that you often want a log-log specification, to model elasticities, so instead of -reg lny lnx- you want -poisson y lnx- but if x also can be zero, you've got trouble--Nick Cox mentions this in the -transint- help file from SSC, I believe). For some models of debt, you might want -zip- to model the "access to credit markets" process with the -inflate- option. In an interesting experiment on savings incentives (http://www.brookings.edu/views/papers/gale/20060711.htm), a large portion of the treatment group got denied accounts by the bank--these were savings accounts! Yet there is some substantial fraction of the population that has almost no access to lending/borrowing markets. On 7/27/07, Richard Williams <Richard.A.Williams.5@nd.edu> wrote: > At 10:34 AM 7/27/2007, Austin Nichols wrote: > >Vitor <vfgate-demog@yahoo.com.br>: > >As I have pointed out before on this list, e.g. > >http://www.stata.com/statalist/archive/2007-04/msg00549.html > >http://www.stata.com/statalist/archive/2006-12/msg00466.html > >-tobit- is inappropriate if the zeros are not censored values > >(representing a negative y* that is observed as y=0). If the zeros > >are simply a point mass in the distribution of a nonnegative dep var, > >then -poisson- or -glm- are better options. In your case, the fact > > Let me follow up with a related question for Austin or anyone > else: A student of mine did a paper where she examined debt. She > dropped all cases where the person had no debt. I told her that was > a bad idea, but wasn't sure what a good idea was. I was thinking > tobit or Heckman, but based on what Austin is saying here, is > -poisson- or -glm- the way to go? * * For searches and help try: * http://www.stata.com/support/faqs/res/findit.html * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**References**:**Re: st: RE: Tobit coefficients***From:*"Austin Nichols" <austinnichols@gmail.com>

**Re: st: RE: Tobit coefficients***From:*<vfgate-demog@yahoo.com.br>

**Re: st: RE: Tobit coefficients***From:*"Austin Nichols" <austinnichols@gmail.com>

**Re: st: RE: Tobit coefficients***From:*Richard Williams <Richard.A.Williams.5@ND.edu>

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