nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2006‒05‒13
six papers chosen by
Philip Yu
Hong Kong University

  1. Calculation of Multivariate Normal Probabilities by Simulation, with Applications to Maximum Simulated Likelihood Estimation By Lorenzo Cappellari; Stephen P. Jenkins
  2. Discrete Choice Survey Experiments: A Comparison Using Flexible Models By Siikamaki, Juha; Layton, David F.
  3. Using Choice Experiments to Measure Relative Values of Statistical Lives: Evidence from Bangladesh By Minhaj Mahmud
  4. Self-Selection in Migration and Returns to Skills By Benoit Dostie; Pierre Thomas Léger
  5. New Evidence on Cross-Country Differences in Job Satisfaction Using Anchoring Vignettes. By Kristensen, Nicolai; Johansson, Edvard
  6. Individual’s religiosity enhances trust: Latin American evidence for the puzzle By Pablo Brañas-Garza; Maximo Rossi; Dyane Zaclicever

  1. By: Lorenzo Cappellari (Catholic University of Milan, ISER and IZA Bonn); Stephen P. Jenkins (ISER, University of Essex, DIW Berlin and IZA Bonn)
    Abstract: We discuss methods for calculating multivariate normal probabilities by simulation and two new Stata programs for this purpose: -mdraws- for deriving draws from the standard uniform density using either Halton or pseudo-random sequences, and an egen function -mvnp()- for calculating the probabilities themselves. Several illustrations show how the programs may be used for maximum simulated likelihood estimation.
    Keywords: simulation estimation, maximum simulated likelihood, multivariate probit, Halton sequences, pseudo-random sequences, multivariate normal, GHK simulator
    JEL: C15 C51 C87
    Date: 2006–05
  2. By: Siikamaki, Juha (Resources for the Future); Layton, David F.
    Abstract: This study investigates the convergent validity of discrete choice contingent valuation (CV) and contingent rating/ranking (CR) methods using flexible econometric methods. Our results suggest that CV and CR can produce consistent data (achieve convergent validity) when respondent’s preferred choices and the same changes in environmental quality are considered. We also find that CR models that go beyond modeling the preferred choice and include additional ranks cannot be pooled with the CV models. Accounting for preference heterogeneity via random coefficient models and their flexible structure does not make rejection of the hypothesis of convergent validity less likely, but instead rejects the hypothesis to about the same degree or perhaps more frequently than fixed parameter models commonly used in the literature.
    Keywords: valuation, stated preferences, data pooling, random coefficients, Rayleigh, habitat conservation
    Date: 2006–04–26
  3. By: Minhaj Mahmud (Keele University, Centre for Economic Research and School of Economic and Management Studies)
    Abstract: By assuming that an individual has preferences concerning different states of the world and these preferences can be described by an individual social welfare function, we explore the relative value of statistical life using survey data from Bangladesh. We apply a pair-wise choice experiment on life-saving programs to elicit individuals’ preferences regarding differences in the values of statistical lives related to age. We find that the relative value decreases strongly with age and that people have strong preferences for saving more life-years, rather than lives per se. Moreover, in specific follow-up questions, it is again elicited that a majority of the respondents believe that it is better, from a social point of view, to save younger individuals.
    Keywords: Social preference; choice experiment; life-saving programs; relative value of life; Bangladesh.
    JEL: D63 I18 J17
    Date: 2006–01
  4. By: Benoit Dostie; Pierre Thomas Léger
    Abstract: Several papers have tested the empirical validity of the migration models proposed by Borjas (1987) and Borjas, Bronars, and Trejo (1992). However, to our knowledges, none has been able to disentangle the separate impact of observable and unobservable individual characteristics, and their respective returns across different locations, on an individual's decision to migrate. We build a model in which individuals sort, in part, on potential earnings - where earnings across different locations are a function of both observable and unobservable characteristics. We focus on the inter-provincial migration patterns of Canadian physicians. We choose this particular group for several reasons including the fact that they are paid on a fee-for-service basis. Since wage rates are exogenous, earning differentials are driven by differences in productivity. We then estimate a mixed conditional-logit model to determine the effects of individual and destination-specific characteristics (particularly earnings differentials) on physician location decisions. We find, among other things, that high-productivity physicians (based on unobservables) are more likely to migrate to provinces where the productivity premium is greater, while low-productivity physicians are more likely to migrate to areas where the productivity premium is lower. These results are consistent with a modified Borjas model of self-selection in migration based on both unobservables and observables.
    Keywords: Migration, Self-Selection, Earnings, Longitudinal Data, Productivity
    JEL: J24 J61 C23 C35
    Date: 2006
  5. By: Kristensen, Nicolai (Department of Economics, Aarhus School of Business); Johansson, Edvard (The Research Institute of the Finnish Economy)
    Abstract: This paper presents results on cross-country comparison of job sat- <p> isfaction across seven EU countries taking into account that people in <p> di¤erent countries may perceive subjective questions di¤erently. We <p> apply a chopit model approach where the threshold parameters in an <p> ordered probit model are re-scaled through anchoring vignettes. Com- <p> pared to a traditional ordered probit model, which yields the familiar <p> result that Denmark is ranked in the very top followed by Finland, <p> the country ranking is altered when the chopit model is applied. In <p> this case, the Scandinavian countries are ranked somewhat lower while <p> workers from the Netherlands are found to have the highest level of job <p> satisfaction. These results suggest that cultural di¤erences in the way <p> people perceive subjective questions about satisfaction make simple <p> cross-country comparison misleading.
    Keywords: Job Satisfaction; Cross-Country Comparison; Chopit Model
    JEL: C25 I31
    Date: 2006–01–01
  6. By: Pablo Brañas-Garza (Department of Economic Theory and Economic History, University of Granada); Maximo Rossi (Universidad de la República, Uruguay); Dyane Zaclicever (Universidad de la República, Uruguay)
    Abstract: This paper explores the effect of religious observance and affiliation to the dominant religion (Catholicism) on trust in institutions, towards others and market attitudes. The analysis is performed using a Latin American database of twenty thousand respondents from 2004 by means of ordered probit models. The most interesting results are: i) Trust toward others is positively correlated with religious observance and with Catholic affiliation. ii) There is a positive correlation between trust in the government, in the police, in the armed forces, in the judiciary and in the banking system and religious practice in general. Identical positive results are obtained for Catholic affiliation. iii) Correlations with attitudes toward the market, in general, are heterogeneous but never negative. In sum, individual’s level of religiosity crucially affects trust in institutions and toward peers. We also found that Catholicism encourages both trust in institutions and towards others. Thus, we found a positive effect of “religiosity” on social capital. In fact, we never found any negative (and significant) effect on the variables considered.
    Keywords: trust in institutions, economic behavior, religious practise, Catholics.
    JEL: Z12 Z13
    Date: 2006–05–05

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