Alternative parameterizations in business tendency surveys

Summary In business surveys, the response categories most often are of the type increase, no increase and decrease. In modelling how the response variable depends on exogeneous variables one has to decide whether the response categories can be treated as ordered or unordered categories. Though the response categories are constructed as ordered categories it is not so clear that the respondent actually uses them as ordered. The middle category may be used as a don't know category if the respondent has insufficient information.Here categorical regression models are considered for the ordered and the unordered case. Three types of models are investigated: unordered models resulting from utility maximization, threshold models and two-step models which treat the middle category explicitely as a separate category. The relationship between models is considered. The models are applied to a sample of the IFO-Konjunkturtest and are compared to each other.Survey data have been kindly provided by IFO-Institut, München. We thank G. Nerb and J. B. Lindlbauer, IFO-Institut.