Brown, S. orcid.org/0000-0002-4853-9115, Gray, D., Greene, W. et al. (1 more author) (2023) Arbitrary inflation in fractional models. Working Paper. Sheffield Economic Research Paper Series, 2023006 (2023006). Department of Economics, University of Sheffield ISSN 1749-8368
Abstract
The analysis of subjective probabilities, that are fractional or share variables by definition, is becoming increasingly widespread in both economics and the social sciences in general. To avoid nonsensical predictions, empirical predictions for such variables must respect the fact that they are necessarily bounded on the 0 − 1 (or, 0 − 100, for percentage-type responses) interval. In addition, where the response variable of interest corresponds to a self-report on a fixed scale, individuals are often drawn to particular focal-point responses, resulting in distinct spikes in the empirical distribution. In this paper, we suggest a simple model that accounts for all of the nuances of such data, including its fractional and bounded nature as well as arbitrary inflation at such focal-points (which may appear at any point in the interval and are highly likely at the endpoints). We estimate our model using data drawn from the Italian Survey of Income and Wealth relating to an individual’s subjective marginal propensity to consume (MPC).
Metadata
Item Type: | Monograph |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2023 The Author(s). For reuse permissions, please contact the Author(s). |
Keywords: | Focal-points; Fractional models; Inflated outcomes; Subjective probabilities; Marginal propensity to consume |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) > Sheffield Economics Research Papers Series The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 02 Mar 2023 13:57 |
Last Modified: | 02 Mar 2023 13:57 |
Published Version: | https://www.sheffield.ac.uk/economics/research/ser... |
Status: | Published |
Publisher: | Department of Economics, University of Sheffield |
Series Name: | Sheffield Economic Research Paper Series |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:196961 |