Stephen Pudney

Modelling individual choice : the econometrics of corners, kinks, and holes

The Econometrics of Individual Behaviour Part 1 The Theory of Rational Choice: Choice Sets, Preferences and Utility Functions The Opportunity Set Direct Utility and the Interior Optimum Indirect Utility and Roys Identity The Cost Function and Shephards Lemma The Distance Function Variation in Preferences.Part 2 Survey Methods and Cross-Section Econometrics: Sampling Techniques The Survey enquiry An Example - the UK Family Expenditure Survey Estimation Under Exogenous Sampling Estimation Under Endogenous Sampling Non-Response and Extraneous Sample Selection. Part 3 Choice Among Discrete Alternatives: Applications of Discrete Choice Models Estimation and Testing Random Parameter Models Alternative-Specific Random Errors Tverskys Elimination Model Hierarchical and Sequential Discrete Choice Composite Discrete-Continuous Choice. Part 4 Zero Expenditures and Corner Solutions: Single Equation Censored Regression (Tobit) Models Systems of Censored Regression equations Corner Solutions Consumption and Purchases - the P-Tobit Model Partially-Observed Explanatory Variables. Part 5 Kinked and Discontinuous Budget Frontiers Some Examples Models with Deterministic Preferences Models with Random Preferences More on Stochastic Specification. Part 6 Sequential Choice in Continuous Time - Duration Models The Hazard Function Applications of Duration Models Extensions Parametric Estimation Semi-Parametric Methods. Part 7 Barriers to Choice: Point Rationing Bounds on Behaviour Discrete Opportunities. Appendices: logistic, extreme value and generalised value distributions truncated and censored distributions the computation of probability integrals.

Gender, race, pay and promotion in the British nursing profession: estimation of a generalized ordered probit model

We analyse job grading within the UK National Health Service nursing profession, using 1994 survey data. We start from the ordered probit model, for which we develop and apply appropriate specification tests. Threshold constancy and covariate exogeneity are rejected, with important consequences for estimates of the influence of gender, ethnicity, training and career interruptions. We find little evidence of disadvantage for females relative to males, but significant differences in speed of promotion between ethnic groups, implying non-negligible differences in lifetime earnings. Copyright

Illicit drug use, unemployment, and occupational attainment

In this paper, we use data from the British Crime Survey (BCS) to examine the effect of illicit drug use on labour market outcomes. We find very little evidence to support any relationship between drug use, hard or soft, and occupational attainment. However, we find compelling evidence to suggest that drug use, particularly the use of opiates, cocaine and crack cocaine, is associated with an increased risk of unemployment, regardless of age or gender.

A model of female labour supply in the presence of hours restrictions

Abstract We develop a discrete choice model of female labour supply in Finland, using a data set constructed by merging the 1980 Labour Force Survey and Housing and Population Census. This contains observations on the perceived incidence of constraints in the labour market, and allows us to identify the effects of such constraints on observed labour supply. Approximately one in five women appears to be seriously constrained in her choice of hours of work. Our estimated model implies that the response of labour supply to variation in tax and wage rates is rather small.

Survey Design and the Analysis of Satisfaction

We analyze the effect of survey design on reported job satisfaction by exploiting two quasi-experiments in the British Household Panel Survey: a change in question design and parallel use of different interview modes. We show that apparently minor differences in survey design lead to substantial biases in econometric results, particularly on gender differences. The common empirical finding that women care less about wages and prefer to work fewer hours than men appears largely an artifact of survey design rather than a true behavioral difference.

Measurement error in stylised and diary data on time use

We investigate the nature of measurement error in time-use data. Analysis of “stylized” recall questionnaire estimates and diary-based estimates of housework time from the same respondents of a British survey gives evidence of systematic biases in the stylized estimates and large random errors in both types of estimates. We examine the effect of these measurement problems on three common types of statistical analyses in which the time-use variable is used as: (1) adependent variable, (2) an explanatory variable, and (3) a basis for cross-tabulations. We develop methods to correct the biases induced by these measurement errors.

The Road to Ruin? Sequences of Initiation to Drugs and Crime in Britain

This study investigates the routes by which young people develop patterns of drug-using and offending behaviour. Survey data are used to assess the gateway effect — the tendency for soft drug use to lead to subsequent hard drug use and criminal activity. We argue that apparently strong gateway effects can be due to unobservable personal characteristics which produce a spurious association between different forms of problem behaviour. After correcting statistically for these confounding factors, gateway effects appear small. This casts doubt on the view that a more relaxed policy stance on soft drugs will lead to a hard drug epidemic. Copyright Royal Economic Society 2003

How reliable are microsimulation results?: An analysis of the role of sampling error in a U.K. tax-benefit model

Abstract We assess the statistical reliability of microsimulation models in two ways: by comparing simulated outcomes with survey ‘actuals’, and by calculating asymptotic confidence intervals for a variety of summary measures. The confidence intervals we derive take account of re-weighting for differential survey response, and also the effects of imposing revenue-neutrality. They are calculated for a version of one of the most widely-used U.K. tax-benefit simulation models. The results suggest that baseline simulations are reasonably accurate, but that some widely-used measures of the effects of policy changes may be very imprecise estimates of population effects.

Occupational Pensions and Job Mobility in Britain: Estimation of a Random-Effects Competing Risks Model

We analyse transitions between pensionable jobs, non-pensionable jobs, and other labour market states, using the 1988/9 UK Retirement Survey. We focus on the positive association between length of job tenure and pensionable status, allowing for the possibility that pension scheme members are less mobile than other workers because they have persistent unobserved characteristics that predispose them towards a high degree of security in both employment and retirement. We use a competing risks model with state-specific random effects. The model is estimated by simulated maximum likelihood. Copyright 1996 by John Wiley & Sons, Ltd.

Drugs Policy: What Should We Do About Cannabis?

Public policy has failed to prevent large-scale consumption of cannabis in most developed countries. So what, if anything, should we do to change the policy environment? Cannabis consumption is unambiguously harmful in several ways, but this does not automatically justify the prohibitionist policy dictated by the international drugs conventions. This paper sets out the arguments for policy intervention in the cannabis market and reviews the directions of policy change that have been called for. We argue that existing theoretical insights and empirical evidence give little compelling reason to prefer prohibition to the alternative of legalization of cannabis with harms controlled by regulation and taxation. Given this conclusion and the much wider prevalence of cannabis than of harder drugs, a reasonable way forward is to remove cannabis production and consumption (but not trade) from the current prohibitionist UN drug control treaties, to allow countries to adopt their own policies, thus generating new evidence on the potential impacts of a wider range of policy.