A COUNT-AMOUNT MODEL WITH ENDOGENOUS RECORDING OF OBSERVATIONS

This paper discusses some of the problems which are encountered if an event Y is only recorded if its value satisfies a recording criterion A. It follows that we get an incorrect idea of the frequency of the ev ents and of its true distribution. In order to solve these problems, a n econometric model has been constructed by means of which consistent estimation of the true parameters is possible. The model is estimated on consumer purchases, where the number of purchases is assumed to be NEGBIN-distributed and the purchase amounts obey a lognormal distribut ion. Purchases are only recorded if their value exceeds Dfl. 10. It is shown that ignoring the recording condition will result in biased est imates and invalid predictions. Apart from this, the model is, among o thers, relevant for insurance problems, marketing surveys and criminol ogical and epidemiological phenomena.