nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2006‒09‒16
four papers chosen by
Philip Yu
Hong Kong University

  1. Tell me which perfume you wear, I'll tell you how old you are: Modeling the Impact of Consumer age on Product choice By LAURENT, Gilles; LAMBERT-PANDRAUD, Raphaëlle
  2. Career Progression and Formal versus On-the-Job Training By Jérôme Adda; Christian Dustmann; Costas Meghir; Jean-Marc Robin
  3. State Dependence in Canadian Welfare Participation By Jörgen Hansen; Magnus Lofstrom; Xuelin Zhang
  4. Smoking Habits: Like Father, Like Son, Like Mother, Like Daughter By Maria L. Loureiro; Anna Sanz-de-Galdeano; Daniela Vuri

  1. By: LAURENT, Gilles; LAMBERT-PANDRAUD, Raphaëlle
    Abstract: Perfumes introduced decades ago continue to compete against recently introduced perfumes. In this high involvement category, using a large survey and a conditional logit model, the authors show that the probability of choosing a long-established perfume, rather than a recently introduced one, increases enormously with consumer age. Furthermore, by comparing three possible underlying mechanisms, they demonstrate that an attachment model based on a consumer’s exposure to a perfume (preferences depend linearly on the length of time the consumer has known the perfume and can be developed at any age) fits better than an innovativeness model (younger people prefer recently introduced perfumes) or a nostalgia model (preferences are developed only during an early “sensitive period” of life). The authors draw managerial and research implications from their findings.
    Keywords: Consumer choice; elderly; older consumer; age; perfume; nostalgia; innovativeness; attachment; conditional logit
    JEL: D11
    Date: 2006–07–01
  2. By: Jérôme Adda (University College London and IFS); Christian Dustmann (University College London, IFS and IZA Bonn); Costas Meghir (University College London, IFS and IZA Bonn); Jean-Marc Robin (University of Paris 1, University College London, IFS and IZA Bonn)
    Abstract: We develop a dynamic discrete choice model of training choice, employment and wage growth, allowing for job mobility, in a world where wages depend on firm-worker matches, as well as experience and tenure and jobs take time to locate. We estimate this model on a large administrative panel data set which traces labour market transitions, mobility across firms and wages from the end of statutory schooling. We use the model to evaluate the lifecycle return to apprenticeship training and find that on average the costs outweigh the benefits; however for those who choose to train the returns are positive. We then use our model to consider the long-term lifecycle effects of two reforms: One is the introduction of an Earned Income Tax Credit in Germany, and the other is a reform to Unemployment Insurance. In both reforms we find very significant impacts of the policy on training choices and on the value of realised matches, demonstrating the importance of considering such longer term implications.
    Keywords: educational decision, apprenticeship, dynamic choice, evaluation
    JEL: I2 J6
    Date: 2006–08
  3. By: Jörgen Hansen (Concordia University, CEPR, CIRANO, CIREQ and IZA Bonn); Magnus Lofstrom (University of Texas at Dallas and IZA Bonn); Xuelin Zhang (Statistics Canada)
    Abstract: This paper analyzes transitions into and out-of Social Assistance in Canada. We estimate a dynamic Probit model, controlling for endogenous initial conditions and unobserved heterogeneity, using longitudinal data extracted from the Survey of Labour and Income Dynamics (SLID) for the years 1993-2000. The data indicates that there are substantial provincial differences in social assistance participation. The empirical results indicate that a “welfare trap” does exist in Canada, but the extent of it varies across provinces. The results also suggest that there is a link between provincial variations in structural and spurious state dependence and regional differences in welfare generosity. In particular, the existence of structural state dependence, or a “welfare trap”, appears to be more likely in provinces with relatively high benefit levels. One implication of this result is that a change in the welfare benefit structure is not likely to lower participation as significantly among less generous provinces as more generous ones.
    Keywords: welfare, state dependence, unobserved heterogeneity, initial conditions, transition, Canada
    JEL: I30 I38 J18
    Date: 2006–08
  4. By: Maria L. Loureiro (IDEGA, University of Santiago de Compostela); Anna Sanz-de-Galdeano (University of Girona and IZA Bonn); Daniela Vuri (University of Florence, CHILD and IZA Bonn)
    Abstract: We analyze data from the 1994-2002 waves of the British Household Panel Survey to explore the influence of parental smoking habits on their children’s smoking decisions. In order to account for the potential endogeneity of parental smoking habits we use instrumental variable methods. We find that mothers play a crucial role in determining their daughters’ smoking decisions, while fathers’ smoking habits are transmitted primarily to their sons.
    Keywords: youth smoking, intergenerational habit transmission, multivariate probit, instrumental variables
    JEL: I1 C5
    Date: 2006–08

This nep-dcm issue is ©2006 by Philip Yu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.