Hey Frances – I confess We haven’t been following the current books toward wealth, but the exact same circumstances arise into the analysis out of healthcare expenditures, perhaps even a lot more really. Medical care costs was an issue about You.S. as there are loads of records towards the referring to a leading ratio off zeros and extreme skewness regarding the low-no findings within these data. Perhaps not precisely my personal city, but once We manage to remain awake an individual is giving an excellent methodological papers towards the wellness expenditures We collect one to limited mixes is best now, followed by double hurdle and other alternatives-kind of models. GLM means also are very common, which is uncommon when you look at the econometrics.
Chris: I would a little gladly agree totally that normality and heteroskedasticity aren’t new real issues with OLS more often than not; their quotes could be just as much as right, and you can objective, as long as the true matchmaking is actually linear
yet not, I would state when you find yourself interested in inference throughout the philosophy near no, no level of data’ll save on the simple fact that “my model was forecasting negative ten-thousand dollars regarding riches of these some one, while they are indeed during the no.”