Simultaneous‐Equation Systems Involving Binary Choice Variables

Simultaneous-equation systems of continuous variables are well known in the social sciences. Unfortunately, these methods cannot be used when dealing with discrete endogenous variables. Although for discrete types of data a broad range of methods and techniques have been developed, their applicability is restricted to single-equation systems (for example, logit or probit formulations) or to association-type models (log-linear models), mainly because of the lack of suitable estimation methods and computer programs. The basic problem is the multivariate error structure of the endogenous variables. This paper presents a simultaneous-equation system of binary endogenous variables. The model is applied empirically to longitudinal data on mode choice and is compared with the well-known log-linear model.

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