nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2005‒04‒24
seven papers chosen by
Philip Yu
Hong Kong University

  1. Using a choice experiment to estimate the non-use values of wetlands: The case of Cheimaditida wetland in Greece By Ekin Birol; Katia Karousakis; Phoebe Koundouri
  3. Measuring Transactions Costs from Observed Behavior: Market Choices in Peru By Renos Vakis; Elisabeth Sadoulet; Alain de Janvry
  4. Protection Motivation Theory and Contingent Valuation: Perceived Realism, Threat and WTP Estimates for Biodiversity Protection By Riccardo Scarpa; Susanne Menzel
  5. Pathways to Early Retirement in Denmark, 1984-2000 By Mona Larsen; Peder J. Pedersen
  6. Elusive effects of unemployment on happiness By Petri Böckerman; Pekka Ilmakunnas
  7. Una Aproximación Microeconométrica a los Determinantes de la Elección del Modo de Transporte. (A Microeconometric Approach to the Determinants of Travel Mode Choice) By Pablo M Garcia

  1. By: Ekin Birol (Homerton College and Department of Land Economy, University of Cambridge, Cambridge, UK); Katia Karousakis (Department of Economics, University College London, London, UK); Phoebe Koundouri (Department of Economics, Reading University, Reading, UK)
    Abstract: Despite wetlands being amongst the Earth's most productive ecosystems, they have been degraded and lost at an unprecedented rate globally, especially throughout the last century. In recognition of the importance of the crucial ecological functions and economic benefits they provide, international efforts, such as the Ramsar Convention, and European Union level efforts, such as the Water Framework Directive (2000/60/EC), are now in place to ensure conservation, sustainable management and improvement of the remaining wetlands. This paper aims to assist policy makers in formulating efficient, effective and sustainable wetland conservation and management policies by providing them with the results of a valuation study using the Cheimaditida wetland in Greece as a case study. A choice experiment is employed to estimate the benefits of the non-use values of the Cheimaditida wetland that accrue to the Greek public. Results from this choice experiment reveal that there are positive and significant non-use values of this wetland for whose conservation the public is willing to pay. These results can be combined with private use values of wetlands, and weighed against the costs of alternative wetland management scenarios in order to carry out a comprehensive cost benefit analysis. Thus they can aid in the design of socially optimal policies for conservation and sustainable management of the Cheimaditida wetland, with implications for other wetlands in Greece and the rest of Europe.
    Keywords: Choice experiment, non-use values, wetlands, conditional logit model, random parameter logit mode
    Date: 2005–02
  2. By: Pablo M Garcia (Centro de Estudios para la Producción)
    Abstract: It is usual to estimate willingness-to-pay in discrete choice models through Logit models –or their expanded versions-. Nevertheless, these models have very restrictive distributional assumptions. This paper is intended to examine the above mentioned issue and to propose an alternative estimation using semi-parametric techniques (through Simple Index Models). Furthermore, this paper introduces an empirical application of willingness-to-pay for improved subway travel times in the City of Buenos Aires.
    Keywords: Discrete Choice models, Econometrics, Transportation
    JEL: L
    Date: 2005–04–21
  3. By: Renos Vakis (World Bank); Elisabeth Sadoulet (University of California, Berkeley); Alain de Janvry (University of California, Berkeley)
    Abstract: Farmers incur proportional and fixed transactions costs in selling their crops on markets. Using data for Peruvian potato farmers, we propose a method to measure these transactions costs. When opportunities exist to sell a crop on alternative markets, the observed choice of market can be used to infer a monetary measure of transactions costs in market participation. The market choice model is first estimated at the reduced form level with a conditional logit, as a function of variables that explain transactions costs. We then use these market choice equations to control for selection in predicting the idiosyncratic prices that would be received on all markets and the idiosyncratic proportional transactions costs that would be incurred to reach all markets. The net between the two gives us a measure of effective farm-level prices. This allows us to estimate a semi-structural conditional logit of the market choice model. In this model, the choice of market is a function of predicted effective farm-level prices, and of market information that accounts for fixed transactions costs. We can use the estimated coefficients to derive the price equivalence of the fixed cost due to information. We find that the information on market price that farmers receive from their neighbors reduces fixed transactions costs by the equivalent of doubling the price received, and is equal to four times the average transportation cost.
    Keywords: transactions costs, market choice, information,
    Date: 2003–10–01
  4. By: Riccardo Scarpa (University of York); Susanne Menzel (University of Goettingen and University of York)
    Abstract: We report on a discrete-choice CV study conducted in Germany to value the WTP for biodiversity protection in less developed countries. To systematically investigate survey realism and subjective threat assessment from the loss of biodiversity described in the scenario the study includes questions to uncover the constructs of Protection Motivation Theory, which is introduced to the CV literature. The patterns of responses to such questions are analysed using an Expectation-Maximization algorithm to derive class membership probabilities. These are found to match the predictions of Protection Motivation Theory and systematically improve the logistic analysis of the WTP responses.
    Keywords: Biodiversity valuation, Protection motivation theory, Latent class analysis, Expectation-Maximization algorithm, Contingent valuation
    JEL: Q2 D6 C42 C25
    Date: 2005–02
  5. By: Mona Larsen (Danish National Institute of Social Research, Aarhus School of Business and Graduate School for Integration, Production and Welfare); Peder J. Pedersen (University of Aarhus, Danish National Institute of Social Research and IZA Bonn)
    Abstract: This paper describes and analyses the pathways to early retirement in Denmark. The analyses are based on a 10 per cent panel sample of the population 45-66 years old followed from 1984 onwards. We use a multinomial logit approach to analyse the characteristics of individuals that retire through each pathway compared to those remaining in the labour force. The transition from work to retirement is complex and far from the conventional idea of exit typically occurring from a job at the official pension age. Eight pathways from work to an early retirement program are identified. One group of pathways is transitions directly from employment corresponding to 75 per cent of all transitions in the sample period. The great majority of these transitions occur to an early retirement program. A second group consists of pathways dominated by unemployment insurance benefits (UIB) covering 20 per cent. The remaining 5 per cent of the transitions occur through pathways dominated by benefit programs reflecting a low attachment to the labour force in the period prior to retirement. Overall, availability and/or generosity of retirement programs are important for early retirement through the employment and UIB dominated pathways. For early retirement through other pathways, however, personal characteristics seem to be at least as important as retirement programs.
    Keywords: retirement, pathways, panel data
    JEL: J14 J26
    Date: 2005–04
  6. By: Petri Böckerman (Labour Institute for Economic Research); Pekka Ilmakunnas (Helsinki School of Economics)
    Abstract: This paper explores the connection between unemployment and subjective well-being in Finland by using cross-sections for the years 1990, 1996 and 2000 from World Values Surveys. An unprecedented increase in the national unemployment rate (from 3 to 17 per cent) did not produce a drop in the mean level of subjective well-being. Experiencing unemployment personally reduces life satisfaction, but does not have a significant effect on happiness in ordered logit estimation. However, generalized ordered logit estimation reveals that being unemployed has a negative effect on happiness at lower happiness scores, but no significant effect at high happiness levels.
    Keywords: happiness, unhappiness, life satisfaction, unemployment
    JEL: C30 J28 J31
    Date: 2005–04–19
  7. By: Pablo M Garcia (Centro de Estudios para la Producción)
    Abstract: The transportation system is a fundamental component of the urban economic development, with its generating feature of negative supply externalities standing out (and, as a result, of the satisfied demand for some kind of this supply’s structure) related to congestion and environmental pollution. In this context, the paper studies customers’ reaction in light of changes in the relative prices, to thus evaluate the effect of different political measures. For that reason, a discrete choice model has been designed which reflects the election of travel mode used by commuters around the city of Buenos Aires.
    Keywords: Transportation system, discrete choice models, econometrics, urban economics.
    JEL: C5 L9
    Date: 2005–04–21

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