Lonnie Magee

Bio: Lonnie Magee is an academic researcher from McMaster University. The author has contributed to research in topics: Linear regression & Estimator. The author has an hindex of 14, co-authored 43 publications receiving 2180 citations. Previous affiliations of Lonnie Magee include McMaster-Carr & University of Western Ontario.

Alternative Transformations to Handle Extreme Values of the Dependent Variable

Abstract: Transformations that could be used to reduce the influence of extreme observations of dependent variables, which can assume either sign, on regression coefficient estimates are studied in this article. Two that seem reasonable on a priori grounds—the extended Box—Cox (BC) and the inverse hyperbolic sine (IHS)—are evaluated in detail. One feature is that the log-likelihood function for IHS is defined for zero values of the dependent variable, which is not true of BC. The double-length regression technique (Davidson and MacKinnon 1984) is used to perform hypothesis tests of one transformation against the other using Canadian data on household net worth. These tests support the use of IHS instead of BC for this data set. Empirical investigators in economics often work with a logged dependent variable (taking the natural logarithm of a data series is, of course, a special case of BC) to reduce the weight their particular estimation procedure might otherwise attach to extreme values of the dependent v...

R 2 Measures Based on Wald and Likelihood Ratio Joint Significance Tests

Abstract: Two methods are suggested for generating R 2 measures for a wide class of models. These measures are linked to the R 2 of the standard linear regression model through Wald and likelihood ratio statistics for testing the joint significance of the explanatory variables. Some currently used R 2's are shown to be special cases of these methods.

Transforming the dependent variable in regression models

Abstract: A scale-invariant family of transformations is proposed which, unlike the Box-Cox transformation, can be applied to variables that are equal to zero or of either sign. Two Lagrange Multiplier tests are derived for testing the null hypothesis of no dependent variable transformation against the alternative of a transformation from this family. These tests do not require explicit specification of the transformation and are related to the RESET test. We discuss a model that uses a particular case of this transformation, based on sinh-1, in some detail. Monte Carlo results are given, and an empirical example is provided.

The Wage Premium to a University Education in Canada, 1971-1991

Abstract: Using micro data from the Canadian Survey of Consumer Finances, 1971-91, we investigate the return to a university education. Our conclusions are that while there appears to have been some decline in the return to a university degree during the 1970s in Canada (similar to the United States), the return did not rebound much during the 1980s except among the youngest experience (age) group. There is, however, considerable noise in the ratios from year to year so that one is likely to draw misleading inferences if only a few years of data are used.

A note on a general definition of the coefficient of determination

Abstract: SUMMARY A generalization of the coefficient of determination R2 to general regression models is discussed. A modification of an earlier definition to allow for discrete models is proposed.

Estimation and Inference in Econometrics

Abstract: Offering a unifying theoretical perspective not readily available in any other text, this innovative guide to econometrics uses simple geometrical arguments to develop students' intuitive understanding of basic and advanced topics, emphasizing throughout the practical applications of modern theory and nonlinear techniques of estimation. One theme of the text is the use of artificial regressions for estimation, reference, and specification testing of nonlinear models, including diagnostic tests for parameter constancy, serial correlation, heteroscedasticity, and other types of mis-specification. Explaining how estimates can be obtained and tests can be carried out, the authors go beyond a mere algebraic description to one that can be easily translated into the commands of a standard econometric software package. Covering an unprecedented range of problems with a consistent emphasis on those that arise in applied work, this accessible and coherent guide to the most vital topics in econometrics today is indispensable for advanced students of econometrics and students of statistics interested in regression and related topics. It will also suit practising econometricians who want to update their skills. Flexibly designed to accommodate a variety of course levels, it offers both complete coverage of the basic material and separate chapters on areas of specialized interest.

The Impact of Customer Relationship Characteristics on Profitable Lifetime Duration

Abstract: The authors develop a framework that incorporates projected profitability of customers in the computation of lifetime duration. Furthermore, the authors identify factors under a manager’s control that explain the variation in the profitable lifetime duration. They also compare other frameworks with the traditional methods such as the recency, frequency, and monetary value framework and past customer value and illustrate the superiority of the proposed framework. Finally, the authors develop several key implications that can be of value to decision makers in managing customer relationships.

Alternative Transformations to Handle Extreme Values of the Dependent Variable

Abstract: Transformations that could be used to reduce the influence of extreme observations of dependent variables, which can assume either sign, on regression coefficient estimates are studied in this article. Two that seem reasonable on a priori grounds—the extended Box—Cox (BC) and the inverse hyperbolic sine (IHS)—are evaluated in detail. One feature is that the log-likelihood function for IHS is defined for zero values of the dependent variable, which is not true of BC. The double-length regression technique (Davidson and MacKinnon 1984) is used to perform hypothesis tests of one transformation against the other using Canadian data on household net worth. These tests support the use of IHS instead of BC for this data set. Empirical investigators in economics often work with a logged dependent variable (taking the natural logarithm of a data series is, of course, a special case of BC) to reduce the weight their particular estimation procedure might otherwise attach to extreme values of the dependent v...

Income and Outcomes: A Structural Model of Intrahousehold Allocation

Abstract: There is evidence from several sources that one cannot treat many-person households as a single decision maker. If this is the case, then factors such as the relative incomes of the household members may affect the final allocation decisions made by the household. We develop a method of identifying how ''incomes affect outcomes'' given conventional family expenditure data. The basic assumption we make is that household decision processes lead to efficient outcomes. We apply our method to a sample of Canadian couples with no children. We find that the final allocations of expenditures on each partner depend significantly on their relative incomes and ages and on the level of lifetime wealth.