@article{Burke:143014, recid = {143014}, author = {Burke, William J.}, title = {Fitting and interpreting Cragg's tobit alternative using Stata}, journal = {Stata Journal}, address = {2009}, number = {199-2016-2661}, pages = {9}, year = {2009}, abstract = {In this article, I introduce the user-written command craggit, which simultaneously fits both tiers of Cragg’s (1971, Econometrica 39: 829–844) “twotier” (sometimes called “two-stage” or “double-hurdle”) alternative to tobit for corner-solution models. A key limitation to the tobit model is that the probability of a positive value and the actual value, given that it is positive, are determined by the same underlying process (i.e., the same parameters). Cragg proposed a more flexible alternative that allows these outcomes to be determined by separate processes through the incorporation of a probit model in the first tier and a truncated normal model in the second. Also, tobit is nested in craggit, making the latter a popular choice among “two-tier” models. In the article, I also present postestimation syntax to facilitate the understanding and interpretation of results.}, url = {http://ageconsearch.umn.edu/record/143014}, doi = {https://doi.org/10.22004/ag.econ.143014}, }