Implementation of a double-hurdle model
Abstract. Corner solution responses are frequently observed in the social sciences.
One common approach to model phenomena that give rise to corner solution responses
is to use the tobit model. If the decision to participate in the market
is decoupled from the consumption amount decision, then the tobit model is inappropriate.
In these cases, the double-hurdle model presented in Cragg (1971,
Econometrica 39: 829–844) is an appropriate alternative to the tobit model. In
this article, I introduce a command, dblhurdle, that fits the double-hurdle model.
The implementation allows the errors of the participation decision and the amount
decision to be correlated. The capabilities of predict after dblhurdle are also discussed.
The College of William and Mary
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dblhurdle, tobit, Heckman, Cragg, double hurdle, hurdle
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