Browsing by Subject "Policy Effect Estimation"

Now showing 1 - 1 of 1
  • Thumbnail Image
    Item
    Exploring the Importance of Accounting for Nonlinearity in Correlated Count Regression Systems from the Perspective of Causal Estimation and Inference
    (2021-07) Zhang, Yilei; Terza, Joseph V.; Vest, Joshua R.; Morrison, Wendy; Gupta, Sumedha
    The main motivation for nearly all empirical economic research is to provide scientific evidence that can be used to assess causal relationships of interest. Essential to such assessments is the rigorous specification and accurate estimation of parameters that characterize the causal relationship between a presumed causal variable of interest, whose value is to be set and altered in the context of a relevant counterfactual and a designated outcome of interest. Relationships of this type are typically characterized by an effect parameter (EP) and estimation of the EP is the objective of the empirical analysis. The present research focuses on cases in which the regression outcome of interest is a vector that has count-valued elements (i.e., the model under consideration comprises a multi-equation system of equations). This research examines the importance of account for nonlinearity and cross-equation correlations in correlated count regression systems from the perspective of causal estimation and inference. We evaluate the efficiency and accuracy gains of estimating bivariate count valued systems-of-equations models by comparing three pairs of models: (1) Zellner’s Seemingly Unrelated Regression (SUR) versus Count-Outcome SUR - Conway Maxwell Poisson (CMP); (2) CMP SUR versus Single-Equation CMP Approach; (3) CMP SUR versus Poisson SUR. We show via simulation studies that it is more efficient to estimate jointly than equation-by-equation, it is more efficient to account for nonlinearity. We also apply our model and estimation method to real-world health care utilization data, where the dependent variables are correlated counts: count of physician office-visits, and count of non-physician health professional office-visits. The presumed causal variable is private health insurance status. Our model results in a reduction of at least 30% in standard errors for key policy EP (e.g., Average Incremental Effect). Our results are enabled by our development of a Stata program for approximating two-dimensional integrals via Gauss-Legendre Quadrature.