Observed Choice, Estimation, and Optimism About Policy Changes

Eric Rasmusen ()

Econometrics from EconWPA

Abstract: A policy will be used more heavily in a particular time and place where its marginal cost is lower. The analyst who treats times and places as identical will overestimate the policy's net benefit, especially for policy intensities greater than exist in his sample. In regression analysis, the problem can be solved by instrumental variables and a correction for heteroskedasticity. In an example using state-level data, the technique substantially increases the estimated responsiveness of the illegitimacy rate to transfer payments.

JEL-codes: C1 C2 C3 C4 C5 C8 (search for similar items in EconPapers)
Date: 1995-06-14, Revised 1995-06-16
Note: A 92KB LaTeX file.
View list of references

Downloads: (external link)
http://129.3.20.41/eps/em/papers/9506/9506004.pdf (application/pdf)
http://129.3.20.41/eps/em/papers/9506/9506004.ps.gz (application/postscript)
http://129.3.20.41/eps/em/papers/9506/9506004.tex (application/x-tex)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpem:9506004

Access Statistics for this paper

More papers in Econometrics from EconWPA
Series data maintained by EconWPA ().