Much empirical research is concerned with estimating conditional mean, median, or hazard
functions. For example, a wage equation gives the mean, median or, possibly, some
other quantile of wages of employed individuals conditional on characteristics such as
years of work experience and education. A hedonic price function gives the mean price
of a good conditional on its characteristics. The function of interest is rarely known a
priori and must be estimated from data on the relevant variables. For example, a wage
equation is estimated from data on the wages, experience, education and, possibly, other
characteristics of individuals. Economic theory rarely gives useful guidance on the form
(or shape) of a conditional mean, median, or hazard function. Consequently, the form of
the function must either be assumed or inferred through the estimation procedure.