Graphs and Occam’s Razor

One argument / point of criticism I often hear from people who start exploring Directed Acyclic Graphs (DAG) is that graphical models can quickly become very complex. When you read about the methodology for the first time you get walked through all these toy models – small, well-behaved examples with nice properties, in which causal inference works like a charm.

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Why Tobit models are overused

In my field of research we’re often running regressions with innovation expenditures or sales with new products aon the left-hand side. Usually we observe many zeros for these variables because firms do not invest at all in R&D and therefore also do not come up with new products. Many researchers then feel inclined to use Tobit models. But frankly, I never understood why. Continue reading Why Tobit models are overused