Overview

Data collected by means of households’ expenditure survey may present a large proportion of zero expenditures due to many households recording, for one reason or another, no expenditure for some items. Since the seminal paper of Tobin (1958), a large econometric literature has been developed to deal correctly with this problem of zero observations. In particular, a good selection mechanism was introduced by Cragg (1971) and a purchasing mechanism by Deaton and Irish (1984). We propose an encompassing approach with a general three equations model for which a zero expense can be observed either because:

• the good is not selected,
• the good is selected but not consumed because of lack of financial resources,
• the good is selected and consumed, but purchased infrequently so that no expense is observed during the period of the survey.

mhurdle provides a set of tools to estimate (by maximum likelihood) and test (using especially vuong test) this generalized hurdle model.

Installation

mhurdle is on CRAN.

install.packages("mhurdle")

For the development version, use

install.packages("devtools")
devtools::install_github("ycroissant/mhurdle")