Copula bivariate probit models: with an application to medical expenditures

Rainer Winkelmann

No 29, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: The bivariate probit model is frequently used for estimating the effect of an endogenous binary regressor (the "treatment") on a binary health outcome variable. This paper discusses simple modifications that maintain the probit assumption for the marginal distributions while introducing non-normal dependence using copulas. In an application of the copula bivariate probit model to the effect of insurance status on the absence of ambulatory health care expen- diture, a model based on the Frank copula outperforms the standard bivariate probit model.

Keywords: Bivariate probit; binary endogenous regressor; Frank copula; Clayton copula (search for similar items in EconPapers)
JEL-codes: C35 I12 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-ecm and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: COPULA BIVARIATE PROBIT MODELS: WITH AN APPLICATION TO MEDICAL EXPENDITURES (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:029

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