A zero-inflated ordered probit model, with an application to modelling tobacco consumption
Publication Source

Journal of Econometrics

Journal article
Western Pacific
Economy status
High-income economies
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Data for discrete ordered dependent variables are often characterised by “excessive” zero observations which may relate to two distinct data generating processes. Traditional ordered probit models have limited capacity in explaining this preponderance of zero observations. We propose a zero-inflated ordered probit model using a double-hurdle combination of a split probit model and an ordered probit model. Monte Carlo results show favourable performance in finite samples. The model is applied to a consumer choice problem of tobacco consumption indicating that policy recommendations could be misleading if the splitting process is ignored.