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on Discrete Choice Models |
| By: | Greene, William H.; Gillman, Max; Harris, Mark N. |
| Abstract: | We propose a Tempered Ordered Probit (TOP) model. Our contribution lies not only in explicitly accounting for an excessive number of observations in a given choice category - as is the case in the standard literature on inflated models; rather, we introduce a new econometric model which nests the recently developed Middle Inflated Ordered Probit (MIOP) models of Bagozzi and Mukherjee (2012) and Brooks, Harris, and Spencer (2012) as a special case, and further, can be used as a specification test of the MIOP, where the implicit test is described as being one of symmetry versus asymmetry. In our application, which exploits a panel data-set containing the votes of Bank of England Monetary Policy Committee (MPC) members, we show that the TOP model affords the econometrician considerable flexibility with respect to modeling the impact of different forms of uncertainty on interest rate decisions. Our findings, we argue, reveal MPC members. asymmetric attitudes towards uncertainty and the changeability of interest rates. |
| Keywords: | Monetary policy committee, voting, discrete data, uncertainty, tempered equations |
| JEL: | C3 E50 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2013-05&r=dcm |
| By: | Yarmukhamedov, Sherzod (VTI) |
| Abstract: | This paper uses discrete choice and count data models to analyze the effects of a tax on vehicle insurance levied in Sweden in 2007. The analysis is based on a large set of micro-level panel data on individual insurance holders at the largest insurance company in Sweden for the period 2006-2010. Two questions are addressed: How did the tax reform influence the choice of insurance coverage, and how did changes in coverage affect the incidence of claims? The results show that, on average, the tax reform increased the odds of choosing lower insurance coverage by 47 percent, and that the tax reform had more impact on older drivers. However, switching to lower coverage due to the tax reform has not resulted in significant changes in claim distributions, though the incidence of claims decreased by 20 percent for switchers aged 35-44 in the pre-reform period, indicating a mitigation of ex ante moral hazard in vehicle insurance. |
| Keywords: | Vehicle insurance; Moral hazard; Traffic safety; Tax reform |
| JEL: | C33 C54 D82 H20 L51 |
| Date: | 2013–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2013_014&r=dcm |