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Re: st: continuous data measured as ordinal catogories

From   Richard Williams <>
To   "" <>, Stata List <>
Subject   Re: st: continuous data measured as ordinal catogories
Date   Thu, 08 Apr 2010 18:33:10 -0500

At 05:05 PM 4/8/2010, Shehzad Ali wrote:
Hi listers,

This question is probably beyond the scope of this list (so apologies in advance). I am dealing with an odd dataset in which willingness-to-pay has been measured using the following categories:

$1 per month
$5 per month
$10 per month
Any other amount/month

I find this data very odd for the purpose of analysis (regression or other statistical methods). I want to model the relationship of willingness-to-pay and respondent characteristics. I wonder if someone on the list has any thoughts.

That last category is really weird. Does it include both less than $1 and more than $10? Do people maybe write in what the amount is?

If you want it as an independent variable, my first impulse is to break it into dummies. Also, Long & Freese's Regression Models for Categorical Dependent Variables Using Stata shows how to test whether it is legit to treat an ordinal independent variable as a continuous variable. See pp. 421-422. Basically, you run a model with the single variable treated as continuous, and then a model with the 3 dummies, and then test whether the 3 dummies approach provides a significantly better fit than the single variable approach. If not, then treat the var as continuous.

If you want it as a dependent variable, you could use mlogit -- or possibly one of the ordinal regression techniques if you think the last category always means more than $10 (or less than $1).

Richard Williams, Notre Dame Dept of Sociology
OFFICE: (574)631-6668, (574)631-6463
HOME:   (574)289-5227
EMAIL:  Richard.A.Williams.5@ND.Edu

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