Wednesday, September 17, 2008

A Primer On Ordered Choice Models

Thanks to Colm for sending this on earlier today:

Modeling Ordered Choices: A Primer and Recent Developments

William H. Greene, David A. Hensher

June 15, 2008 (Version 4 - available here)

We survey the literature on models for ordered choices, including ordered logit and probit specifications. The contemporary form of the model is presented and analyzed in detail. The historical development of the model is presented as well. We detail a number of generalizations that have appeared in the recent literature. Finally, we propose a new form of the model that accommodates in a natural, internally consistent form, functional form flexibility and individual heterogeneity. Much of this study is pedagogical. However, the last few sections propose new model formulations, and illustrate them with an application to self reported health satisfaction.

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