Is Peace a Missing Value or a Zero?

31 Pages Posted: 11 Apr 2014

See all articles by Colin Vance

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Nolan Ritter

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Date Written: December 10, 2013

Abstract

Sample selection models, variants of which are the Heckman and Heckit models, are increasingly used by political scientists to accommodate data in which censoring of the dependent variable raises concerns of sample selectivity bias. Beyond demonstrating several pitfalls in the calculation of marginal effects and associated levels of statistical significance derived from these models, we argue that many of the empirical questions addressed by political scientists would – for both substantive and statistical reasons – be more appropriately addressed using an alternative but closely related procedure referred to as the two-part model (2PM). Aside from being simple to estimate, one key advantage of the 2PM is its less onerous identification requirements. Specifically, the model does not require the specification of so-called exclusion restrictions, variables that are included in the selection equation of the Heckit model but omitted from the outcome equation. Moreover, we argue that the interpretation of the marginal effects from the 2PM, which are in terms of actual outcomes, are more appropriate for the questions typically addressed by political scientists than the potential outcomes ascribed to the Heckit results. Drawing on data compiled by Sweeney (2003) from the Correlates of War database, we present an empirical analysis of conflict intensity illustrating that the choice between the sample selection model and 2PM can bear fundamentally on the conclusions drawn.

Keywords: conflict; Heckit model; two-part model; potential effects; actual effects; identification

JEL Classification: C24

Suggested Citation

Vance, Colin and Ritter, Nolan, Is Peace a Missing Value or a Zero? (December 10, 2013). Ruhr Economic Paper No. 466. Available at SSRN: https://ssrn.com/abstract=2423259 or http://dx.doi.org/10.2139/ssrn.2423259

Colin Vance (Contact Author)

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
0049-201-8149-237 (Phone)

HOME PAGE: http://www.rwi-essen.de

Nolan Ritter

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

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