IDEAS home Printed from https://ideas.repec.org/a/spr/snbeco/v3y2023i6d10.1007_s43546-023-00478-5.html
   My bibliography  Save this article

Review of Tobit, Heckman and double hurdle econometric models: supported with evidences from the studies conducted in Ethiopia

Author

Listed:
  • Adem Kelifa

    (Gambella University)

Abstract

Econometric models are crucial element in any economic and its related data analysis to put better conclusion and forward an interesting recommendations. Therefore, model selection needs critical attention when dealing with this issue. It is tried to present the review of Tobit, Heckman two step, Heckman maximum likelihood and double hurdle econometric models in this paper. The rationale behind selection of those models is that it is difficult to strictly determine which model to use among them during development of research proposal and those models are being used in a various thematic areas currently. Therefore, this paper is supported with the review of empirical studies conducted in Ethiopia on the agricultural commercialization, particularly, market orientation and participation. The result of reviewed literatures and empirical studies shows that likelihood ratio test can be used to check for whether Tobit or double hurdle model best fit the data. Heckman two step can be used if inverse mill ratio is found significant. In the case where inverse mill ratio of Heckman two step model is not significant, Vuong test can be applied to compare Heckman maximum likelihood and double hurdle model. To sum up, based on the theoretical and empirical reviews, it is recommended to select the appropriate econometric model by performing recommended statistical tests.

Suggested Citation

  • Adem Kelifa, 2023. "Review of Tobit, Heckman and double hurdle econometric models: supported with evidences from the studies conducted in Ethiopia," SN Business & Economics, Springer, vol. 3(6), pages 1-14, June.
    • Handle: RePEc:spr:snbeco:v:3:y:2023:i:6:d:10.1007_s43546-023-00478-5
    DOI: 10.1007/s43546-023-00478-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s43546-023-00478-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s43546-023-00478-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gebremedhin, Berhanu & Jaleta, Moti, 2010. "Commercialization of Smallholders: Is Market Participation Enough?," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96159, African Association of Agricultural Economists (AAAE).
    2. Schmidt, Peter & Lin, Tsai-Fen, 1984. "Simple tests of alternative specifications in stochastic frontier models," Journal of Econometrics, Elsevier, vol. 24(3), pages 349-361, March.
    3. Allen McDowell, 2003. "From the help desk: hurdle models," Stata Journal, StataCorp LP, vol. 3(2), pages 178-184, June.
    4. Intriligator, Michael D., 1983. "Economic and econometric models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 1, chapter 3, pages 181-221, Elsevier.
    5. Khan, Irfan & Zakari, Abdulrasheed & Dagar, Vishal & Singh, Sanjeet, 2022. "World energy trilemma and transformative energy developments as determinants of economic growth amid environmental sustainability," Energy Economics, Elsevier, vol. 108(C).
    6. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    7. Hansen, Bruce E., 2005. "Challenges For Econometric Model Selection," Econometric Theory, Cambridge University Press, vol. 21(1), pages 60-68, February.
    8. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-333, March.
    9. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    10. ADEME, Alelign & LEGESSE, Belaineh & HAJI, Jema & GOSHU, Degye, 2017. "Smallholder Farmers Crop Commercilization In The Highlands Of Eastern Ethiopia," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 20(2), November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Egemen İPEK, 2019. "An Empirical Study on Alcohol Participation and Consumption Decision in Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(41).
    2. Halkos, George E. & Jones, Nikoleta, 2012. "Modeling the effect of social factors on improving biodiversity protection," Ecological Economics, Elsevier, vol. 78(C), pages 90-99.
    3. Rozana Himaz, 2010. "Intrahousehold Allocation of Education Expenditure: The Case of Sri Lanka," Economic Development and Cultural Change, University of Chicago Press, vol. 58(2), pages 231-258, January.
    4. David Aristei & Federico Perali & Luca Pieroni, 2008. "Cohort, age and time effects in alcohol consumption by Italian households: a double-hurdle approach," Empirical Economics, Springer, vol. 35(1), pages 29-61, August.
    5. Sirchenko Andrei, 2012. "A model for ordinal responses with an application to policy interest rate," EERC Working Paper Series 12/13e, EERC Research Network, Russia and CIS.
    6. David Aristei & Luca Pieroni, 2008. "A double-hurdle approach to modelling tobacco consumption in Italy," Applied Economics, Taylor & Francis Journals, vol. 40(19), pages 2463-2476.
    7. Liverpool-Tasie, Lenis Saweda O., 2014. "Farmer groups and input access: When membership is not enough," Food Policy, Elsevier, vol. 46(C), pages 37-49.
    8. R. Martínez-Espiñeira, 2007. "‘Adopt a Hypothetical Pup’: A Count Data Approach to the Valuation of Wildlife," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(2), pages 335-360, June.
    9. Aloyce R Kaliba & Kizito Mazvimavi & Theresia L Gregory & Frida M Mgonja & Mary Mgonja, 2018. "Factors affecting adoption of improved sorghum varieties in Tanzania under information and capital constraints," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-21, December.
    10. Mark N. Harris & Xueyan Zhao, 2004. "Modelling Tobacco Consumption with a Zero-Inflated Ordered Probit Model," Monash Econometrics and Business Statistics Working Papers 14/04, Monash University, Department of Econometrics and Business Statistics.
    11. Harris, Mark N. & Zhao, Xueyan, 2007. "A zero-inflated ordered probit model, with an application to modelling tobacco consumption," Journal of Econometrics, Elsevier, vol. 141(2), pages 1073-1099, December.
    12. José F. Baños & Luis Valdés & Eduardo Valle & Emma Zapico, 2018. "Economic importance of the motorways of the sea for tourism: The experience of the route Nantes–Gijón," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 20(2), pages 300-320, June.
    13. Ernest M. Zampelli & Steven T. Yen, 2017. "The Impact Of Tax Price Changes On Charitable Contributions To The Needy," Contemporary Economic Policy, Western Economic Association International, vol. 35(1), pages 113-124, January.
    14. Edoardo Di Porto, 2011. "Undeclared Work, Employer Tax Compliance, and Audits," Public Finance Review, , vol. 39(1), pages 75-102, January.
    15. Olwande, John & Smale, Melinda & Mathenge, Mary K. & Place, Frank & Mithöfer, Dagmar, 2015. "Agricultural marketing by smallholders in Kenya: A comparison of maize, kale and dairy," Food Policy, Elsevier, vol. 52(C), pages 22-32.
    16. Hazarika, Bhabesh & Bezbaruah, Madhurjya Prashad & Goswami, Kishor, 2016. "Adoption of modern weaving technology in the handloom micro-enterprises in Assam: A Double Hurdle approach," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 344-356.
    17. Halkos, George & Jones, Nikoleta, 2011. "Social factors influencing the decision to pay for the protection of biodiversity: A case study in two national parks of Northern Greece," MPRA Paper 34581, University Library of Munich, Germany.
    18. Antonio Clavero Barranquero & Mª. Luz González Alvarez, 2005. "A survey of econometric models to analyze the demand and utilisation of health care," Hacienda Pública Española / Review of Public Economics, IEF, vol. 173(2), pages 129-162, June.
    19. David ARISTEI & Manuela Gallo, 2012. "The Drivers of Household Over-Indebtedness and Delinquency on Mortgage Loans: Evidence from Italian Microdata," Quaderni del Dipartimento di Economia, Finanza e Statistica 105/2012, Università di Perugia, Dipartimento Economia.
    20. Edoardo Di Porto, 2009. "Audit, tax compliance and undeclared work: an empirical analysis," LABORatorio R. Revelli Working Papers Series 94, LABORatorio R. Revelli, Centre for Employment Studies.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:snbeco:v:3:y:2023:i:6:d:10.1007_s43546-023-00478-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.