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From |
Shehzad Ali <[email protected]> |

To |
[email protected] |

Subject |
Re: st: stata code for two-part model |

Date |
19 Aug 2008 06:33:49 +0100 |

Thank you all for your very useful thoughts on this issue.

I am running regression on two separate sets of expenditure data: one for general health expenditure which includes all costs including those for self-medication etc., and second for expenditure related to formal health care, including primary and hospital care but excluding self-medication.

I agree that two-part model is not the best option but is -heckman- model a resaonable alternative if the selection step is for zero/non-zero expenditure and outcome for the positive expenditure? Looking at Austin's argument, I understand that -heckman- run into similar problem as two-part model. Is that right?

Shehzad

On Aug 18 2008, Austin Nichols wrote:

In expectation? People who have truly zero probability of incurring hospital costs? On Mon, Aug 18, 2008 at 1:08 PM, Lachenbruch, Peter <[email protected]> wrote:`The problem was about hospitalization costs. These can be true zeros. Tony Peter A. Lachenbruch Department of Public Health Oregon State University Corvallis, OR 97330 Phone: 541-737-3832 FAX: 541-737-4001 -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Austin Nichols Sent: Monday, August 18, 2008 9:38 AM To: [email protected] Subject: Re: st: stata code for two-part model Peter <[email protected]>: I think this claim is a bit of a red herring: "use of a continuous model for data in which there is a clump of zeros seems incorrect." Note that the -glm- approach assumes the mean of y given observables X is nonzero, and E(y|X)=exp(Xb), not that observed y is nonzero! Including the observations where y=0 is the whole point of the -glm- approach--otherwise we would run ols regression of ln(y) on X. And if you are claiming that the "true" model for (expected) healthcare expenditures does have true zeros that are identifiable, then I disagree. Some of your obs may spend nothing on health care (though annual spending, including myriad items such as aspirin, is unlikely to truly be zero for anyone) but that does not mean their conditional mean should be zero. Maybe people who are dead have a conditional mean of zero, but they should probably be excluded from the analysis... When spending is measured in discrete dollars, a big clump of people who have predicted spending less than 50 cents may have a conditional mean of zero measured in the same units as the data. But that does not mean their "true" conditional mean is zero. That said, a demand/expenditure model will have more and more "true" (or rounded off) zeros as the category of demand/expenditure gets narrower and narrower and the time window over which it is measured gets narrower... think aspirin expenditures by week or day... but it is not clear to me that a two-part model is the right approach even in those cases. On Mon, Aug 18, 2008 at 11:33 AM, Lachenbruch, Peter <[email protected]> wrote:`

In some instances, the model for healthcare expenditures does havetruezeros that are identifiable. In one study I consulted on the datacamefrom a health insurer, and zeros were people who had not gone to hospital. The use of a continuous model for data in which there is a clump of zeros seems incorrect. There is no transformation that can removethis`clump. The severity of the problem depends a bit on the size of the clump. In the hospital insurance data (wanting to estimate hospitalization costs in the policy holders) 95% of the population had no costs. Pretending that these were continuous would lead to some nonsense results. At the present time, I have a data set that has 32 out of 145 people with zeros. However, these are not necessarily identifiable since they could be slightly greater than zero. I'm gritting my teeth on this and pretending all is well. However, a histogram shows enormous skewness. I'll probably try a square root. Tony Peter A. Lachenbruch Department of Public Health Oregon State University Corvallis, OR 97330 Phone: 541-737-3832 FAX: 541-737-4001 -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Austin Nichols Sent: Saturday, August 16, 2008 8:50 AM To: [email protected] Subject: Re: st: stata code for two-part model Shehzad Ali et al. -- See also http://www.nber.org/papers/t0228 The two part models of health expenditures have always struck me as a bad idea; think about how you would get predictions for each indiv in your sample. The "stage 1" probit classifies people as having expenditures or not (some correctly, some not) and then the "stage 2" ols model gives predicted expenditures only for those people who actually have positive expenditures (not those who are classified by the probit as likely to have positive expenditures) unless you predict out of sample. At least one preferred approach of calculating marginal effects by comparing predictions over the whole sample turns out to be practically and analytically difficult in that setting. However, a -glm- with a log link (or equivalently a -poisson- regression) has no trouble: those people with extremely low predicted expenditures would round to zero predicted expenditures if you thought about a survey with expenditures measured discretely in dollars, say. Everyone has E(y)=exp(Xb) and there is no real issue with calculating marginal effects. Once you are in the -glm- framework it is also easy to think about model fit and alternative links... On Sat, Aug 16, 2008 at 3:41 AM, Eva Poen <[email protected]> wrote:`

Shehzad, this looks like a hurdle model. Have you search the ssc archives to see if someone else has programmed it for you? Have a look at -hplogit-, for example. If you end up doing it yourself, I think you need to do a bit of programming. In order for -mfx- to work after your estimation, you need a way of telling it what you want the marginal effects to be calculated for. In your case, this would be the overall expected cost of care from your model. The way to feed this to -mfx- is via the predict(predict_option), but for this to work you need to write a -predict- command and an estimation command for your model. See for example this post: http://www.stata.com/statalist/archive/2005-10/msg00091.html Hope this helps, Eva 2008/8/16 Shehzad Ali <[email protected]>:Hi, I was wondering if someone can help with stata code for calculatingmarginaleffects after two-part models for say, cost of care. Here, firstpartis aprobit model for seeking care or not, and the second part is an OLSmodel ofcost of care, conditional on decision to seek care. Here is thesimplifiedcode: probit care $xvar reg cost $zvar if care==1 mfx I understand that mfx after the second part gives us the marginaleffectsfor the OLS part only, and not the conditional marginal effects. Any help would be appreciated. Thanks, Shehzad* * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/ * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/* * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

-- Shehzad I Ali Department of Social Policy & Social Work University of York YO10 5NG +44 (0) 773-813-0094 * * For searches and help try: * http://www.stata.com/help.cgi?search * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**Follow-Ups**:**Re: st: stata code for two-part model***From:*"Austin Nichols" <[email protected]>

**References**:**st: stata code for two-part model***From:*"Shehzad Ali" <[email protected]>

**Re: st: stata code for two-part model***From:*"Austin Nichols" <[email protected]>

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