I do suspect within state variation since water is under the control of the State in India, this is one of the reason to suspect within state variation.
Thanks a lot for your valuable suggestions.
Divya.
---- Original message ----
>Date: Mon, 1 Sep 2008 23:00:12 +0100
>From: "Schaffer, Mark E" <[email protected]>
>Subject: RE: st: When number of regressors greater than the number of clusters in OLS regression
>To: <[email protected]>
>
>Divya,
>
>> -----Original Message-----
>> From: [email protected]
>> [mailto:[email protected]] On Behalf Of
>> Divya Balasubramaniam
>> Sent: 01 September 2008 22:26
>> To: [email protected]
>> Subject: Re: st: When number of regressors greater than the
>> number of clusters in OLS regression
>>
>> I am still quite unclear exactly why I do not need to cluster
>> by State at all? Can you kindly explain it one more time to
>> me?
>
>Whether or not you need to use cluster-robust depends on whether you
>think your data have a problem that cluster-robust can address, namely
>(1) the error terms in your equation are correlated within states
>because of unobserved heterogeneity (so the iid assumption fails), but
>(2) the error terms are not correlated across states.
>
>A good example would be whether you are looking at something that is
>affected by state-level regulation, i.e., the laws regulating it vary
>from state to state, but you don't have variables that control for this
>somehow.
>
>> Is it because that my dataset is not a sample but
>> accounts for 100% of the population? Or is there something
>> else I need to consider?
>>
>> so instead of areg Y on X, absorb(state) robust
>> cluster(state); I will now run areg Y on X, absorb(state)
>> robust correct?
>
>Two comments here: first, you are probably better off using xtreg
>instead of areg (more modern Stata command); and second and more
>important, Stock and Watson (Econometrica 2007, if I recall correctly)
>have shown that the fixed effects estimator with -robust- generates SEs
>that are not correct.
>
>> Also can someone explain the inference of individual
>> coefficients estimates when we encounter this kind of problem
>> in case OLS regression (with lesser # cluster than the # regressors)
>
>See my previous email and the references therein - I think they're
>pretty clear, especially the one by Vince Wiggins.
>
>Cheers,
>Mark
>
>Prof. Mark Schaffer
>Director, CERT
>Department of Economics
>School of Management & Languages
>Heriot-Watt University
>Edinburgh EH14 4AS
>tel +44-131-451-3494 / fax +44-131-451-3296
>http://ideas.repec.org/e/psc51.html
>
>
>> Thanks,
>> Divya.
>>
>> ---- Original message ----
>> >Date: Mon, 1 Sep 2008 16:59:59 -0400
>> >From: Steven Samuels <[email protected]>
>> >Subject: Re: st: When number of regressors greater than the
>> number of
>> >clusters in OLS regression
>> >To: [email protected]
>> >
>> >Divya-
>> >
>> >So, you have n = 436. Just remove State as a cluster variable and
>> >continue with your modeling. You won't be troubled by the limit on
>> >regressors again; just keep the number to <=44 (10% of observations).
>> >
>> >Good luck!
>> >
>> >-Steven Samuels
>> >
>> >On Sep 1, 2008, at 4:22 PM, Divya Balasubramaniam wrote:
>> >
>> >> Hello Dr. Steven,
>> >>
>> >> My dependent variable is:share of total number of households in a
>> >> district having access to tap water. (I have the district totals)
>> >>
>> >> Divya.
>> >> =======================================
>> >> Divya Balasubramaniam
>> >> Economics PhD Student
>> >> Terry College of Business
>> >> University of Georgia
>> >> Athens -30602.
>> >>
>> >> From: Steven Samuels <[email protected]>
>> >> Date: September 1, 2008 4:13:40 PM EDT
>> >> To: [email protected]
>> >> Subject: Re: st: When number of regressors greater than
>> the number of
>> >> clusters in OLS regression
>> >> Reply-To: [email protected]
>> >>
>> >>
>> >> Divya,
>> >> I reread your question and realize that you probably do not have
>> >> sample data at all. The Census of India was not a sample
>> at all, but,
>> >> ideally, was a 100% enumeration. (Just as in other countries, this
>> >> will not be perfectly true.) So, I am not sure that you should be
>> >> clustering on State, or even on district, for that matter.
>> >> Please reply with details about your observations. For example, do
>> >> you have information on individual households or just
>> district totals?
>> >>
>> >> Regards,
>> >>
>> >> Steven
>> >>
>> >>
>> >> On Sep 1, 2008, at 1:05 PM, Steven Samuels wrote:
>> >>
>> >>> More basic questions, Divya: What is your target population: the
>> >>> 17 states (of India, perhaps?) or the entire country?
>> Were the 17
>> >>> states selected from all states by a sampling process?
>> Or were they
>> >>> chosen in some other way--for example, because they had data
>> >>> available. Are all districts from the selected states in your
>> >>> sample?
>> >>>
>> >>>
>> >>> -Steven
>> >>> On Sep 1, 2008, at 12:35 PM, Divya Balasubramaniam wrote:
>> >>>
>> >>>> Dear Dr.Schaffer,
>> >>>>
>> >>>> I am using clustering in my analysis and I am having
>> some trouble
>> >>>> understanding some of the important issues. I have read several
>> >>>> papers you have written on clustering issues and hence I am
>> >>>> emailing you to seek help.
>> >>>>
>> >>>> I am doing a district level analysis for the census year 2001. I
>> >>>> have 436 districts in total coming from 17 States. I run an OLS
>> >>>> regression of Share of households having tap water access on
>> >>>> several controls variables (I have about 25 Regressors).
>> I use the
>> >>>> STATA command areg Y on X, absorb(State) cluster(state).
>> I have the
>> >>>> state fixed effects and clustered by State.
>> >>>>
>> >>>> My question is: I have more regresors(25) than the number of
>> >>>> clusters(17). I also find in the STATA output that I have F-stat
>> >>>> missing. I would like to seek your advice on whether I can make
>> >>>> inference by looking at the individual coefficient estimates and
>> >>>> the reported robust Standard errors. I did see your
>> comment on this
>> >>>> issue on the STATA listserv. However, I could not find
>> answers as
>> >>>> to how to fix this problem of having more regressors than the
>> >>>> number of clusters.
>> >>>>
>> >>>> I will be extremely thankful if you can kindly help me in this
>> >>>> regard.
>> >>>> Sincerely,
>> >>>> Divya.
>> >>>> =======================================
>> >>>> Divya Balasubramaniam
>> >>>> Economics PhD Student
>> >>>> Terry College of Business
>> >>>> University of Georgia
>> >>>> Athens -30602.
>> >>>> *
>> >>>> * For searches and help try:
>> >>>> * http://www.stata.com/help.cgi?search
>> >>>> * http://www.stata.com/support/statalist/faq
>> >>>> * http://www.ats.ucla.edu/stat/stata/
>> >>>
>> >>> *
>> >>> * For searches and help try:
>> >>> * http://www.stata.com/help.cgi?search
>> >>> * http://www.stata.com/support/statalist/faq
>> >>> * http://www.ats.ucla.edu/stat/stata/
>> >>
>> >> *
>> >> * For searches and help try:
>> >> * http://www.stata.com/help.cgi?search
>> >> * http://www.stata.com/support/statalist/faq
>> >> * http://www.ats.ucla.edu/stat/stata/
>> >>
>> >>
>> >
>> >*
>> >* For searches and help try:
>> >* http://www.stata.com/help.cgi?search
>> >* http://www.stata.com/support/statalist/faq
>> >* http://www.ats.ucla.edu/stat/stata/
>> =======================================
>> Divya Balasubramaniam
>> Economics PhD Student
>> Terry College of Business
>> University of Georgia
>> Athens -30602.
>> *
>> * For searches and help try:
>> * http://www.stata.com/help.cgi?search
>> * http://www.stata.com/support/statalist/faq
>> * http://www.ats.ucla.edu/stat/stata/
>>
>
>
>--
>Heriot-Watt University is a Scottish charity
>registered under charity number SC000278.
>
>
>*
>* For searches and help try:
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>* http://www.ats.ucla.edu/stat/stata/
=======================================
Divya Balasubramaniam
Economics PhD Student
Terry College of Business
University of Georgia
Athens -30602.
*
* For searches and help try:
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* http://www.stata.com/support/statalist/faq
* http://www.ats.ucla.edu/stat/stata/
