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Maximum Likelihood Estimation of Models with Beta-Distributed Dependent Variables

Published online by Cambridge University Press:  04 January 2017

Philip Paolino
Philip Paolino*
Affiliation:
Department of Government, The University of Texas at Austin, 536 Burdine Hall, Austin, TX 78712-1087. e-mail: ppaolino@mail.la.utexas.eduhttp://www.la.utexas.edu/∼ppaolino
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Abstract

Research in political science is often concerned with modeling dependent variables that are proportions. Proportions are relevant in a wide variety of substantive areas, including elections, the bureaucracy, and interest groups. Yet because most researchers rely upon an approach, OLS, that does not recognize key aspects of proportions, the conclusions we reach from normal models may not provide the best understanding of phenomena of interest in these areas. In this paper, I use Monte Carlo simulations to show that maximum likelihood estimation of these data using the beta distribution may provide more accurate and more precise results. I then present empirical analyses illustrating some of these differences.

Type
Research Article
Information
Political Analysis , Volume 9 , Issue 4 , 2001 , pp. 325 - 346
Copyright
Copyright © 2001 by the Society for Political Methodology 

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