Hi everyone,

Currently, I am working on the estimation of health depreciation rate following Yogo (2016) - (p.19,22-24). I've got some questions regarding the use of cutpoints in ordered probit model to calibrate health depreciation rate. The summary of the problem and the article "Portfolio choice in Retirement: Health risk and the demand for annuities, housing, and risky assets" - Yogo (2016) are attached here.

Any help would be much appreciated. Thank you so much in advance.

Chi.