Abstract
ABSTRACTExcess zeros are encountered in many empirical count data applications. We provide a new explanation of extra zeros, related to the underlying stochastic process that generates events. The process has two rates: a lower rate until the first event and a higher one thereafter. We derive the corresponding distribution of the number of events during a fixed period and extend it to account for observed and unobserved heterogeneity. An application to the socioeconomic determinants of the individual number of doctor visits in Germany illustrates the usefulness of the new approach.
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