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A Brief Overview of Nonparametric Methods in Economics

Published online by Cambridge University Press:  10 May 2017

Arne Hallam
Arne Hallam*
Affiliation:
Department of Economics, Iowa State University
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The concept of nonparametric analysis, estimation, and inference has a long and storied existence in the annals of economic measurement. At least four rather distinct types of analysis are lumped under the broad heading of nonparametrics. The oldest, and perhaps most common, is that associated with distribution-free methods and order statistics. Similar in spirit, but different in emphasis, is nonparametric density estimation, such as the currently popular kernel estimator for regression. Semi-parametric or semi-nonparametric estimation combines parametric analysis of portions of the problem with nonparametric specification for the remainder, such as the specification of a specific functional form for a regression function with a nonparametric representation of the error distribution. The final type of nonparametrics is that associated with data envelopment analysis and revealed preference, although the use of the term nonparametrics for this research is perhaps a misnomer. This paper will briefly review each of the four types of analysis, leaning heavily on other published work for more detailed exposition. The paper will then discuss in more detail the application of the revealed-preference approach to four specific economic problems: efficiency, the structure of technology or preferences, technical or taste change, and risky choice. The paper is not complete, exhaustive, or detailed. The primary purpose is to expose the reader to a variety of techniques and provide ample reference to the relevant literature.

Type
Invited Presentation
Information
Northeastern Journal of Agricultural and Resource Economics , Volume 21 , Issue 2 , October 1992 , pp. 98 - 112
Copyright
Copyright © 1992 Northeastern Agricultural and Resource Economics Association 

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Footnotes

Journal Paper no. J-15075 of the Iowa Agricultural and Home Economics Experiment Station, Ames, IA. Project no. 2894.

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