Heterogeneous Rebound Effects: Comparing Estimates from Discrete-Continuous Models

21 Pages Posted: 2 Feb 2016

See all articles by Manuel Frondel

Manuel Frondel

RWI Leibniz Institute for Economic Research ; Ruhr University Bochum (RUB)

Fernanda Martinez Flores

RWI – Leibniz Institute for Economic Research; Ruhr University of Bochum

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Multiple version iconThere are 2 versions of this paper

Date Written: January 16, 2016

Abstract

Discrete-continuous models have become a common technique for addressing selectivity biases in data sets with endogenously partitioned observational units. Alternative two-stage approaches have been suggested by LEE (1983), DUBIN and MCFADDEN (1984), and DAHL (2002), all of which capture the first-stage discrete choice by the multinomial logit model, while the second-stage outcome equation is estimated using OLS. The nonlinearity introduced by the selection bias correction implies that the second-stage coefficients cannot be interpreted as marginal effects. Instead, the marginal effects are obtained using the estimates from both the first and second stages, a step that has been widely neglected in the applied literature. After deriving formulae for the marginal effects obtained from these selection correction approaches, we estimate a joint model of automobile ownership and distance driven to quantify the rebound effect, the behaviorally induced increase in driving that results from higher fuel economy. Our example illustrates that the pattern of rebound effects varies substantially depending on the method of selection bias correction.

Keywords: Discrete-continuous models; marginal effects; car use

JEL Classification: D12, Q21, Q41

Suggested Citation

Frondel, Manuel and Martinez Flores, Fernanda and Vance, Colin, Heterogeneous Rebound Effects: Comparing Estimates from Discrete-Continuous Models (January 16, 2016). Ruhr Economic Paper No. 601. Available at SSRN: https://ssrn.com/abstract=2721717 or http://dx.doi.org/10.2139/ssrn.2721717

Manuel Frondel (Contact Author)

RWI Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany

Ruhr University Bochum (RUB) ( email )

Universitätsstraße 150
Bochum, NRW 44780
Germany

Fernanda Martinez Flores

RWI – Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Ruhr University of Bochum ( email )

Universitätsstraße 150
Bochum, 44801
Germany

Colin Vance

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

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