Semi-parametric models for satisfaction with income

Charles Bellemare (), Bertrand Melenberg () and Arthur van Soest ()

No 87, Discussion Paper from Tilburg University, Center for Economic Research

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.

Keywords: semiparametric estimation; satisfaction (search for similar items in EconPapers)
Date: 2002
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