so_stodom {stodom}

second-order stochastic dominance test

Description

This function tests for second-order stochastic dominance.

Usage

so_stodom(data_1, data_2, bins_size, n_draws, useed, variable_1, variable_2, type)

Arguments

data_1

data 1.

data_2

data 2.

bins_size

bin size.

n_draws

number of draws to compute p values (default = 500).

useed

user defined seed

variable_1

name of a (as a string); only for the output table (default = "a").

variable_2

name of b (as a string); only for the output table (default = "b").

type

type of bootstrapped test, bootstrapping 1 and 2 of Barrett and Donald (2003) are available (default = "boot2").

Details

This function computes the consistent test of second-order stochastic dominance following Barrett and Donald (2003). In detail, this function estimate their Kolmogorov-Smirnov type tests based on bootstrapping 2. The function was implemented as part of Schaub xxx

Value

The function returns a list object containing the p-values of two dominance tests (i.e., variable 1 vs. variable 1 and variable 2 vs. variable 1).

References

Barrett, G. F., & Donald, S. G. (2003). Consistent tests for stochastic dominance. Econometrica, 71(1), 71-104.

Schaub, S. & El Benni, N. (2024). How do price (risk) changes influence farmers’ preference to reduce fertilizer application?

Examples

# load stodom
require(stodom)

 data_a <- rnorm(500, 3, 2)
 data_b <- rnorm(500, 1, 2)

# estimate second-order stochastic dominance
so_stodom(data_1 = data_a, data_2 = data_b, n_draws = 100, useed = 1, bins_size = 1)