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The equivalence of three latent class models and ML estimators

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  • Tennekoon, Vidhura S.

Abstract

The purpose of this letter is to show the equivalence of three latent class models; the switching regression model with endogenous switching and a latent outcome (the binary Roy model), the probit model with a systematically misclassified dependent variable, and a trivariate probit model with partial observability. The probit model with measurement error is an enhanced version of existing models which allows for the potential correlation between error terms. Establishing this connection, we hope, will help a researcher working on one of these classes of estimators to benefit from the literature and software related to other families.

Suggested Citation

  • Tennekoon, Vidhura S., 2016. "The equivalence of three latent class models and ML estimators," Economics Letters, Elsevier, vol. 141(C), pages 147-150.
    • Handle: RePEc:eee:ecolet:v:141:y:2016:i:c:p:147-150
    DOI: 10.1016/j.econlet.2016.02.028
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    References listed on IDEAS

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    1. Sean Murphy & Daniel Friesner & Robert Rosenman, 2015. "Opioid Misuse Among Adolescents: New Evidence from a Misclassification Analysis," Applied Health Economics and Health Policy, Springer, vol. 13(2), pages 181-192, April.
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    4. Michael Lokshin & Zurab Sajaia, 2004. "Maximum likelihood estimation of endogenous switching regression models," Stata Journal, StataCorp LP, vol. 4(3), pages 282-289, September.
    5. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    6. Vidhura Tennekoon & Robert Rosenman, 2016. "Systematically misclassified binary dependent variables," Communications in Statistics - Theory and Methods, Taylor & Francis Journals, vol. 45(9), pages 2538-2555, May.
    7. Vidhura Tennekoon & Robert Rosenman, 2015. "The pot calling the kettle black? A comparison of measures of current tobacco use," Applied Economics, Taylor & Francis Journals, vol. 47(5), pages 431-448, January.
    8. Poirier, Dale J., 1980. "Partial observability in bivariate probit models," Journal of Econometrics, Elsevier, vol. 12(2), pages 209-217, February.
    9. Hausman, J. A. & Abrevaya, Jason & Scott-Morton, F. M., 1998. "Misclassification of the dependent variable in a discrete-response setting," Journal of Econometrics, Elsevier, vol. 87(2), pages 239-269, September.
    10. Stephen Goldfeld & Richard Quandt, 1973. "The Estimation of Structural Shifts by Switching Regressions," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 2, number 4, pages 475-485, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Binary Roy model; Partial observability model; Misclassified data; Probit model; Switching regression;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General

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