1. Empirical Methods for Microeconomic Applications
William Greene Department of Economics Stern School of Business

2. Lab 5. Random Parameters and Latent Classes

3. Upload Your Project File

4. Commands for Random Parameters

5. Random Parameter Specifications
All models in LIMDEP/NLOGIT may be fit with random parameters, with panel or cross sections. NLOGIT has more options (not shown here) than the more general cases.
Options for specifications
; FCN = name ( type ), name ( type ), …
Type is N = normal,
U = uniform,
L = lognormal (positive),
T = tent shaped distributions.
C = nonrandom (variance = 0 – only in NLOGIT)
Name is the name of a variable or parameter in the model or A_choice for ASCs (up to 8 characters). In the CLOGIT model, they are A_AIR A_TRAIN A_BUS.
; Correlated parameters (otherwise, independent)

6. Replicability
Consecutive runs of the identical model give different results. Why? Different random draws.
Achieve replicability
(1) Use ;HALTON
(2) Set random number generator before each run with the same value.
CALC ; Ran( large odd number) $
(Setting the seed is not needed for ;Halton)

7. Random Parameters Models
SETPANEL ; Group = id ; Pds = ti $
PROBIT ; Lhs = doctor
; Rhs = One,age,educ,income,female
; RPM ; Pts = 25 ; Halton ; Panel
; Fcn = one(N),educ(N) ; Correlated $
POISSON ; Lhs = Doctor
; Rhs = One,Educ,Age,Income,Hhkids
; Fcn = educ(N)
; Panel ; Pts=100 ; Halton
; Maxit = 25 $
And so on…

10. Saving Individual Expected Values
SETPANEL ; Group = id ; Pds = ti $
PROBIT ; Lhs = doctor
; Rhs = One,age,educ,income,female
; RPM ; Pts = 25 ; Halton ; Panel
; Fcn = one(N),educ(N) ; Correlated
; Parameters $

16. Commands for Latent Class Models