Transcription of Applied Econometrics Lecture 10: Binary Choice Models
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Applied Econometrics Lecture 10: Binary Choice Models
Applied EconometricsLecture 10: Binary Choice ModelsM ns S derbom 22 September 2009 University of Gothenburg. IntroductionThe methods discussed thus far in the course are well suited for modelling a acontinuous,quantitativevariable - economic growth, the log of value-added or output, the log of earnings economic phenomena of interest, however, concern variables that are not continuous or perhapsnot even quantitative. What characteristics ( parental) a ect the likelihood that an individual obtains a higher degree? What determines labour force participation (employed vs not employed)? What factors drive the incidence of civil war?Today we will discussbinary Choice Models . These are central Models in Applied Binary Choice Models are useful when our outcome variable of interest is Binary - a commonsituation in Applied work. Moreover, the Binary Choice model is often used as aningredientin othermodels. For example: In propensity score matching Models (to be covered in lectures 11-12), we identify the averagetreatment e ect by comparing outcomes of treated and non-treated indivduals who, a priori, havesimilar probabilities of being treated.
1. Introduction The methods discussed thus far in the course are well suited for modelling a a continuous, quantitative variable - e.g. economic growth, the log …
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