Top-coded

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In econometrics and statistics, a top-coded dataset is one for which the upper bound is not known. This is often done to preserve the anonymity of people participating in the survey (for example, if a survey included a person with wealth of $51 billion, it would not be anonymous because people would know it is Bill Gates).

1 Example: Top-coding of wealth
2 Implications for ordinary least squares
3 See also
4 References

[edit] Example: Top-coding of wealth

id	age	income
1	26	24778	exact value
2	32	26750	exact value
3	45	26780	exact value
4	32	30000+	top coded
5	45	30000+	top coded

[edit] Implications for ordinary least squares

If the lower bound of the top-coded group is used as a regressor value (30000 in the example above), OLS is biased and inconsistent.
The top-coded group can be omitted from the regression entirely. Provided there are no systematic differences between the omitted group and the included groups, OLS is consistent and unbiased.
The Tobit procedure is robust to top coding, and gives unbiased estimates.