When is a Tobit model used?
A)when you have censored data
B)for categorical data with a normally distributed error term
C)when you want to combine a probit and multinomial logit
D)to estimate varying marginal effects in a binary choice model

Question

Quizplus · Accepted Answer

Tobit models are used when the dependent variable has censoring or truncation. This typically occurs when values below or above a certain threshold cannot be observed or reported. Tobit models account for this censoring by estimating not only the probabilities of a certain outcome, but also the probabilities of censoring.

When Is a Tobit Model Used