Is the Linear Threshold Good Enough? A Scale-Free Parameter and Adequacy Test for Curvature-Induced Threshold Displacement
Applied work often locates a threshold by linearizing a smooth function about a reference point and solving for the crossing. When the function is curved, the linear crossing can be substantively displaced even when standard errors are valid. We introduce the curvature-overstatement parameter $\Theta_{COT}=\log(|h_2^*|...