What is accomplished by using a Tobit model rather than the least squares estimator?
A)it generate unbiased and consistent estimates on censored data
B)it corrects sample selection bias
C)it allows for choice models to be estimated using GLS
D)it generates the same unbiased coefficient estimates,but with smaller variances

Question

Quizplus · Accepted Answer

The Tobit model is used for censored data where some of the dependent variable values are not observed. It is a maximum likelihood approach that can estimate unbiased and consistent parameter estimates even with censored data. Least squares estimators, on the other hand, assume normality and can provide biased estimates when the dependent variable is censored. Therefore, using a Tobit model helps to address this issue and generate accurate estimates. Options B, C, and D are not necessarily accomplished by using a Tobit model.

What Is Accomplished by Using a Tobit Model Rather Than