where [y.sup.*.sub.i] is the real dependent variable, [y.sub.i] is the censored dependent variable
, [x.sub.i] is the independent variable matrix, [beta] is the parametric vector, and [[epsilon].sub.i] is the disturbance term.
Ordinary least squares (OLS) produces biased coefficients if applied to a censored dependent variable. (10)
The OLS coefficients are smaller using this technique as expected since OLS does not account tot the censored dependent variable. The statistical significance of the variables is the same as in the To bit specification except for the number of committees on which an individual serves.
few analyses to capture both time-series and cross-section elements of the trade relationship by employing a panel data set; third, the empirical methodology used in this analysis corrects a major shortcoming in the existing literature by using a censored dependent variable
The model is one of a censored dependent variable
because observations at the limits are observed.
Tobit analysis, which explicitly accounts for a censored dependent variable
, eliminates this source of estimation bias.(12) Further, we reduce the chance of estimation bias from omission of relevant explanatory variables by including yearly time binary variables which control for the exclusion of other causal factors affecting accident vessel damage cost.
If ordinary least squares (OLS) estimation techniques were used to estimate a regression function with a censored dependent variable
, the results would be biased.
"Simultaneous Equations Models with Discrete and Censored Dependent Variables
," Chapter 9.
Estimation issues pertaining to regression with censored dependent variables
are also presented.