The Analysis of Models with Qualitative or Censored Dependent Variables

  • Thomas B. Fomby
  • Stanley R. Johnson
  • R. Carter Hill


Traditionally economists have dealt with models designed to explain the variation in a dependent variable which could be assumed continuous and normally distributed. Economics, however, as a theory of choice, can be applied not only to questions about how much to produce or consume but also“whether” to produce or consume a certain item. More generally, individual economic units often must choose between a finite set of alternatives. Economists are interested in what factors are considered by the decision making unit and in quantifying their individual effects. Some examples of situations where such choices arise are:
  1. (i)

    a household must decide whether to buy or rent a suitable dwelling;

  2. (ii)

    a Senator must decide on whether to vote yes or no on a particular piece of legislation;

  3. (iii)

    a consumer must choose which of perhaps several shopping areas to visit and a mode of transportation;

  4. (iv)

    members of a household must decide whether to take part-time or fulltime employment, or whether or not to seek a second job; and

  5. (v)

    a person must decide whether or not to attend college.



Logit Model Maximum Likelihood Estimator Probit Model Tobit Model Linear Probability Model 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer Science+Business Media New York 1984

Authors and Affiliations

  • Thomas B. Fomby
    • 1
  • Stanley R. Johnson
    • 2
  • R. Carter Hill
    • 3
  1. 1.Department of EconomicsSouthern Methodist UniversityDallasUSA
  2. 2.The Center for Agricultural and Rural DevelopmentIowa State UniversityAmesUSA
  3. 3.Department of EconomicsLouisiana State UniversityBaton RougeUSA

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