Semi-parametric Models for Satisfaction with Income

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Abstract

An overview is presented of some parametric and semi-parametric models, estimators, and specification tests that can be used to analyze ordered response variables.In particular, limited dependent variable models that generalize or-dered probit are compared to regression models that generalize the linear model.These techniques are then applied to analyze how self-reported satisfaction with household income relates to household income, family composition, and other background variables.Data are drawn from the 1998 wave of the German Socio-Economic Panel.The results are used to estimate equivalence scales and the cost of children.We find that the standard ordered probit model is rejected, while some semi-parametric specifications survive specification tests against nonpara-metric alternatives.The estimated equivalence scales, however, are often similar for the parametric and semi-parametric specifications.
Original languageEnglish
Place of PublicationTilburg
PublisherEconometrics
Number of pages39
Volume2002-87
Publication statusPublished - 2002

Publication series

NameCentER Discussion Paper
Volume2002-87

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Household income
Semiparametric model
Income
Equivalence scales
Specification test
Socio-economics
Probit
Ordered probit model
Limited dependent variable models
Estimator
Regression model
Costs

Keywords

  • incomes
  • semiparametric estimation
  • satisfaction

Cite this

Bellemare, C., Melenberg, B., & van Soest, A. H. O. (2002). Semi-parametric Models for Satisfaction with Income. (CentER Discussion Paper; Vol. 2002-87). Tilburg: Econometrics.
Bellemare, C. ; Melenberg, B. ; van Soest, A.H.O. / Semi-parametric Models for Satisfaction with Income. Tilburg : Econometrics, 2002. (CentER Discussion Paper).
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Bellemare, C, Melenberg, B & van Soest, AHO 2002 'Semi-parametric Models for Satisfaction with Income' CentER Discussion Paper, vol. 2002-87, Econometrics, Tilburg.

Semi-parametric Models for Satisfaction with Income. / Bellemare, C.; Melenberg, B.; van Soest, A.H.O.

Tilburg : Econometrics, 2002. (CentER Discussion Paper; Vol. 2002-87).

Research output: Working paperDiscussion paperOther research output

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AU - van Soest, A.H.O.

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N2 - An overview is presented of some parametric and semi-parametric models, estimators, and specification tests that can be used to analyze ordered response variables.In particular, limited dependent variable models that generalize or-dered probit are compared to regression models that generalize the linear model.These techniques are then applied to analyze how self-reported satisfaction with household income relates to household income, family composition, and other background variables.Data are drawn from the 1998 wave of the German Socio-Economic Panel.The results are used to estimate equivalence scales and the cost of children.We find that the standard ordered probit model is rejected, while some semi-parametric specifications survive specification tests against nonpara-metric alternatives.The estimated equivalence scales, however, are often similar for the parametric and semi-parametric specifications.

AB - An overview is presented of some parametric and semi-parametric models, estimators, and specification tests that can be used to analyze ordered response variables.In particular, limited dependent variable models that generalize or-dered probit are compared to regression models that generalize the linear model.These techniques are then applied to analyze how self-reported satisfaction with household income relates to household income, family composition, and other background variables.Data are drawn from the 1998 wave of the German Socio-Economic Panel.The results are used to estimate equivalence scales and the cost of children.We find that the standard ordered probit model is rejected, while some semi-parametric specifications survive specification tests against nonpara-metric alternatives.The estimated equivalence scales, however, are often similar for the parametric and semi-parametric specifications.

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Bellemare C, Melenberg B, van Soest AHO. Semi-parametric Models for Satisfaction with Income. Tilburg: Econometrics. 2002. (CentER Discussion Paper).