EXPLORING THE EXTENSION OF ITEM RESPONSE THEORY MODELS TO THE ECONOMIC AND SOCIAL MEASUREMENT

摘要

This paper has a methodological focus and is aimed at exploring the advantages of using the Item Response Theory (IRT) models in the measurement of financial strain. Basically, the IRT models allow deriving a latent measure and a scale from a set of dichotomous or polytomous items. Although IRT is a traditional technique of educational and psychological measurement, it can be also used as an econometric model in the measurement of economic and social constructs. In this paper, the one and the two parameter-IRT models are compared with the sum-score approach and the multivariate probit regression, as to point out different methodological aspects, applied to the Luxembourg socioeconomic panel (PSELL-3). The paper also examines the software used in the IRT analysis.