Hernandez, M. and Pudney, S. (2012) What you don't see can't hurt you? Panel data analysis and the dynamics of unobservable factors. HEDS Discussion Paper 12/6. (Unpublished)
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Abstract
We investigate the consequences of using time-invariant individual effects in panel data models when the unobservables are in fact time-varying. Using data from the British Offending Crime and Justice panel, we estimate a dynamic factor model of the occurrence of a range of illicit activities as outcomes of young people’s development processes. This structure is then used to demonstrate that relying on the assumption of time-invariant individual effects to deal with confounding factors in a conventional dynamic panel data model is likely to lead to spurious “gateway” effects linking cannabis use to subsequent hard drug use.
| Item Type: | Article |
|---|---|
| Keywords: | Panel data; Dynamic factor models; Individual effects; Illicit drugs; Crime; Gateway effect |
| Academic Units: | The University of Sheffield > Faculty of Medicine, Dentistry and Health (Sheffield) > School of Health and Related Research (Sheffield) > Health Economics and Decision Science > HEDS Discussion Paper Series |
| Depositing User: | Miss Stephanie Haslam |
| Date Deposited: | 10 May 2012 14:47 |
| Last Modified: | 08 Feb 2013 17:37 |
| Status: | Unpublished |
| URI: | http://eprints.whiterose.ac.uk/id/eprint/43886 |
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