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# Re: st: Heckman Procedure

 From Annie Zhang To statalist@hsphsun2.harvard.edu Subject Re: st: Heckman Procedure Date Tue, 11 Jun 2013 14:33:13 +1200

```Hi Sergiy,

Thanks so much for your reply. I don't have an instrument variable for
The issue is that:

Age, gender, wealth affects probability of receiving financial advice.
Financial advice affects asset allocation (variable- cash).

Therefore I need to correct for self-selection bias that receiving
advice may have on asset allocation, given then certain age, gender,
wealth affect probability of receiving advice.

My main multivariate regression is:

reg cash fa age sex logfum

so I wanted to run heckman to correct for self-selection bias using:

Heckman cash fa age sex logfum, select(fa=age sex logfum) twostep

Since fa is being dropped, can you suggest anyway to run heckman that
will work in my situation?

Thank you so very much!!

Kind Regards,
Annie

On Tue, Jun 11, 2013 at 2:27 PM, Sergiy Radyakin <serjradyakin@gmail.com> wrote:
> Annie, Stata is doing the right thing as your variable fa is bringing
> no additional explanatory power to the model since it is a linear
> combination of your variable age sex and logfum from the first stage,
> and thus the separate effect of it can't be identified. Recall that
> the coefficient on a variable is the effect of change of that var
> holding all other constant (ceteris paribus). Can your fa change when
> age,sex, and logfum are fixed? Did you forget perhaps something like
> an instrument? Best, Sergiy
>
> On Mon, Jun 10, 2013 at 10:05 PM, Annie Zhang
> <annieclairezhang@gmail.com> wrote:
>> Hi there,
>>
>> When using the heckman procedure I want to use the independent
>> variable in the first stage as well as make it a dependent variable in
>> the selection model, however stata will drop the variable due to
>> collinearity each time.
>>
>> How can I use the heckman procedure in this case?
>>
>> My model is
>>
>>
>> heckman cash fa age sex logfum, select(fa=age sex logfum) twostep
>>
>> And the 'fa' variable keeps dropping.
>>
>>
>> Kind Regards,
>> Annie
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```