Raphael Studer from Switzerland noticed that the bivariate probit likelihood on page 199 looks suspiciously like the likelihood for old fashioned monaural probit.
Thanks Raphael – this is indeed the wrong likelihood, so don’t try to maximize that at home, folks. It works only if you don’t have an endogenous regressor in the first place. For the correct biprobit likelihood, see, e.g., pp. 849-851 in Greene (2007) or better yet, just do it in stata using biprobit (if you must).
This of course raises the question of how we came to make such a mistake. Is it because Angrist has such a strong aversion to latent-index models that he couldn’t stand the sight of the full likelihood? Or is it just another silly mistake Steve missed in galleys?
Bbbbb . . . bivariate probit!
Raphael Studer from Switzerland noticed that the bivariate probit likelihood on page 199 looks suspiciously like the likelihood for old fashioned monaural probit.
Thanks Raphael – this is indeed the wrong likelihood, so don’t try to maximize that at home, folks. It works only if you don’t have an endogenous regressor in the first place. For the correct biprobit likelihood, see, e.g., pp. 849-851 in Greene (2007) or better yet, just do it in stata using biprobit (if you must).
This of course raises the question of how we came to make such a mistake. Is it because Angrist has such a strong aversion to latent-index models that he couldn’t stand the sight of the full likelihood? Or is it just another silly mistake Steve missed in galleys?