@techreport{NBERt0228,
 title = "Much Ado About Two: Reconsidering Retransformation and the Two-Part Model in Health Economics",
 author = "John Mullahy",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Technical Working Paper Series",
 number = "228",
 year = "1998",
 month = "March",
 URL = "http://www.nber.org/papers/t0228",
 abstract = {In health economics applications involving outcomes (y) and covariates (x), it is often the case that the central inferential problems of interest involve E[y|x] and its associated partial effects or elasticities.  Many such outcomes have two fundamental statistical properties: yò0; and the outcome y=0 is observed with sufficient frequency that the zeros cannot be ignored econometrically.  Common approaches to estimation in such instances include Tobit, selection, and two-part models.  This paper (1) describes circumstances where the standard two-part model with homoskedastic retransformation will fail to provide consistent inferences about important policy parameters; and (2) demonstrates some alternative approaches that are likely to prove helpful in applications.},
}