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Double-hurdle Model with Bivariate Normal Errors: An Application to U.S. Rice Demand

Published online by Cambridge University Press:  28 April 2015

X.M. Gao ,
Eric J. Wailes  and
Gail L. Cramer
X.M. Gao
Affiliation:
TRS Risk Management, American Express, Phoenix
Eric J. Wailes
Affiliation:
Department of Agricultural Economics and Rural Sociology, University of Arkansas
Gail L. Cramer
Affiliation:
Department of Agricultural Economics and Rural Sociology, University of Arkansas
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Abstract

Per capita rice consumption in the U.S. has doubled over the past decade. The effects of social and demographic variables on the household's rice consumption decisions are analyzed along with income and price variables. A double-hurdle model is used to solve simultaneously the consumer decisions whether to purchase rice and how much. The joint decision hypothesis is tested and accepted. The non-normal distribution of error terms may be responsible for possible bias in the empirical test of the joint decision hypothesis. The hyperbolic sine transformation is used to correct the problem in this study prior to testing the joint decision hypothesis.

Keywords

double hurdlenon-normal error distributionrice demand
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 27 , Issue 2 , December 1995 , pp. 363 - 376
Copyright
Copyright © Southern Agricultural Economics Association 1995

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