This chapter reviews the econometric approaches typically used to deal with the spike of zeros when modeling non-negative outcomes such as expenditures, income, or consumption.
I thank Edward Norton and John Mullahy for their helpful comments—all opinions and errors and mine. Forthcoming in the Volume of Contributions in Economic Analysis published by Emerald Publishing in honour of Professor Andrew Jones (ed. Francesco Moscone and Badi Baltagi). No funding was received for writing this chapter. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.