Consistent estimation of the fixed effects ordered logit model

By G. Baetschmann, K. E. Staub, R. Winkelmann. Social Science Research Network, 2015

496 citations recorded by the source corpus.

The paper considers panel data methods for estimating ordered logit models with individual‐specific correlated unobserved heterogeneity. We show that a popular approach is inconsistent, whereas some consistent and efficient estimators are available, including minimum distance and generalized method‐of‐moment estimators. A Monte Carlo study reveals the good properties of an alternative estimator that has not been considered in econometric applications before, is simple to implement and almost as efficient. An illustrative application based on data from the German Socio‐Economic Panel confirms the large negative effect of unemployment on life satisfaction that has been found in the previous literature.

Subfields: Economics and Econometrics, Social Psychology, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/9b776e902339d653fa4be587f7f3a1fd4af48fbd

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Citations in the corpus

Imprint–environment Fit and Performance (2014, methodology): “…by including indicator variables for each individual and by implementing, as a robustness check, a recently developed consistent estimator of the fixed-effects ordered logit model that is immune to small sample bias even in the case of very small samples (Baetschmann, Staub, and Winkelmann, 2011).”
Leadership and the voluntary provision of public goods: Field evidence from Bolivia (2015, methodology): “32Baetschmann et al. (2011) use “blow up and cluster” (BUC) approach to estimate the model using all possible dichotomizations of the dependent variable.”
Household finances and well-being in Australia: An empirical analysis of comparison effects☆ (2016, methodology): “The analysis of the determinants of overall life satisfaction, financial satisfaction and subjective prosperity employs the methodology proposed by Baetschmann, Staub, and Winkelmann (2015), namely the fixed effects ordered logit model estimated via the ‘‘Blow-up and Cluster” estimator.”
Keep it simple: estimation strategies for ordered response models with fixed effects (2014, methodology): “[1] who have recently shown, that the estimation strategies of Ferrer-i-Carbonell and Frijters [9] of which IMCLOG can be considered a special case can produce biased parameter estimates.”
Implicit Stereotypes: Evidence from Teachers’ Gender Bias* (2019, methodology): “Panel A of Table VII reports fixed effects ordered logit estimates using the BUC estimator (Baetschmann et al., 2015), in which the dependent variable assumes value 1 for the vocational track, value 2 for intermediate tracks (technical and non top-tier academic), and value 3 for toptier high-school ”
Does commuting matter to subjective well-being? (2018, methodology): “A more detailed description on this method can be found in Baetschmann et al. (2015).”
The relationship between well-being and commuting revisited: Does the choice of methodology matter? (2014, methodology): “As explained by Baetschmann et al. (2011), there are two problems with direct maximum likelihood estimation of this expression. The first is that only the difference between the thresholds and the fixedeffect αik = μk − αi can be identified. The second is that under fixed-T asymptotics αik cannot be”