Structural Measurement Errors in Nonseparable Models

Hoderlein, Stefan and Winter, Joachim (29. January 2009): Structural Measurement Errors in Nonseparable Models. Discussion Papers in Economics 2009-2

Abstract

This paper considers measurement error from a new perspective. In surveys, response errors are often caused by the fact that respondents recall past events and quantities imperfectly. We explore the consequences of recall errors for such key econometric is- sues as the identification of marginal effects or economic restrictions in structural models. Our identification approach is entirely nonparametric, using Matzkin-type nonseparable models that nest a large class of potential structural models. We establish that measurement errors due to poor recall are generally likely to exhibit nonstandard behavior, in particular be nonclassical and differential, and we provide means to deal with this situation. Moreover, our findings suggest that conventional wisdom about measurement errors may be misleading in many economic applications. For instance, under certain conditions left-hand side recall errors will be problematic even in the linear model, and quantiles will be less robust than means. Finally, we apply the main concepts put forward in this paper to real world data, and find evidence that underscores the importance of focusing on individual response behavior.

• Item Type: Paper (Discussion Paper)
• Keywords: Measurement Error, Nonparametric, Survey Design, Nonseparable Model, Identification, Zero Homogeneity, Demand
• Subjects: Economics; Economics > Discussion Papers in Economics
• Dewey Classification: 300 Social sciences; 300 Social sciences > 330 Wirtschaft
• Journal of Economic Literature classification: C14, D12
• Language: English