A Dynamic Hurdle Model for Zero-Inflated Count Data: With an Application to Health Care Utilization

University of Zurich, Department of Economics, Working Paper No. 151

24 Pages Posted: 10 Apr 2014

See all articles by Gregori Baetschmann

Gregori Baetschmann

University of Zurich

Rainer Winkelmann

University of Zurich - Statistics and Empirical Economic Research; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Date Written: April 2014

Abstract

Excess zeros are encountered in many empirical count data applications. We provide a new explanation of extra zeros, related to the underlying stochastic process that generates events. The process has two rates, a lower rate until the first event, and a higher one thereafter. We derive the corresponding distribution of the number of events during a fixed period and extend it to account for observed and unobserved heterogeneity. An application to the socio-economic determinants of the individual number of doctor visits in Germany illustrates the usefulness of the new approach.

Keywords: excess zeros, Poisson process, exposure, hurdle model

JEL Classification: C25, I10

Suggested Citation

Baetschmann, Gregori and Winkelmann, Rainer, A Dynamic Hurdle Model for Zero-Inflated Count Data: With an Application to Health Care Utilization (April 2014). University of Zurich, Department of Economics, Working Paper No. 151, Available at SSRN: https://ssrn.com/abstract=2422442 or http://dx.doi.org/10.2139/ssrn.2422442

Gregori Baetschmann (Contact Author)

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Rainer Winkelmann

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Centre for Economic Policy Research (CEPR)

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