nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2007‒02‒24
five papers chosen by
Philip Yu
Hong Kong University

  1. Using a Laplace approximation to estimate the random coefficients logit model by non-linear least squares By Matthew Harding; Jerry Hausman
  2. Consumers’ Attitudes on Services of General Interest in the EU: Accessibility, Price and Quality 2000-2004 By Carlo Fiorio; M. Florio; S. Salini; P. Ferrari
  3. Career Progression and Formal versus On-the-Job Training By Adda, Jerome; Dustmann, Christian; Meghir, Costas; Robin, Jean-Marc
  4. Preferences for Protectionism: Do economic factors really matter? By Natalia Melgar; Juliette Milgram; Máximo Rossi
  5. Economic Valuation of Environmental Values of the Landscape Development and Protection Area of Volcji Potok By Verbic, Miroslav; Erker, Renata

  1. By: Matthew Harding (Institute for Fiscal Studies and MIT); Jerry Hausman (Institute for Fiscal Studies and Massachussets Institute of Technology)
    Abstract: Current methods of estimating the random coefficients logit model employ simulations of the distribution of the taste parameters through pseudo-random sequences. These methods suffer from difficulties in estimating correlations between parameters and computational limitations such as the curse of dimensionality. This paper provides a solution to these problems by approximating the integral expression of the expected choice probability using a multivariate extension of the Laplace approximation. Simulation results reveal that our method performs very well, both in terms of accuracy and computational time. This paper is a revised version of CWP01/06.
    Date: 2006–10
  2. By: Carlo Fiorio (University of Milan); M. Florio (University of Milan); S. Salini (University of Milan); P. Ferrari (University of Milan)
    Abstract: The research question addressed by this paper is a simple one: are European consumers happy with the services provided by the utilities after two decades of reforms? We focus on electricity, gas, water, telephone in the EU 15 Member States. The variables we analyse are consumers’ satisfaction with accessibility, price and quality, as reported in three waves of Eurobarometer survey, 2000-2002-2004, comprising around 47,000 observations. We use ordered logit models to analyze the impact of privatization and regulatory reforms, as represented by an OECD dataset, controlling for individual and country characteristics. Our results do not support a clear association between consumers’ satisfaction and a standard reform package of privatization, vertical disintegration, liberalization.
    Keywords: Consumers’ Satisfaction, Gas, Electricity, Telephone, Water, Eurobarometer
    JEL: L94 L95 L96 L50
    Date: 2007–01
  3. By: Adda, Jerome; Dustmann, Christian; Meghir, Costas; Robin, Jean-Marc
    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 life-cycle 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: administrative data; apprenticeship; dynamic discrete choice; education; job mobility; job search; labour supply; matching; tax credits
    JEL: I2 J6
    Date: 2007–02
  4. By: Natalia Melgar (Facultad de Ciencias Económicas, Universidad de la República); Juliette Milgram (Universidad de Granada); Máximo Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: A common scenario for international commerce is the existence of restrictions on free trade,even when the majority of economists agree on the benefits of it, whatever the country’s size or whatever the country’s economic development. In contexts where politicians offer different policy options and voters demand them based on their individual preferences, one may ask what determines individuals preferences on trade policy; which economic, cultural, social and elements shape them. Our goal in this paper is to address this issue for an heterogeneous sample of 34 countries which includes developed and developing countries and small and big ones. In this paper we use data from the 2003 International Social Survey Program (ISSP). Based on an ordered probit model, we conclude that elements such as religion, political preferences, and nationalism, as well as demographic characteristics and country performance, have a significant impact on trade policy preferences.
    Keywords: Preferences, protectionism, religion, nationalism, ISSP
    JEL: D01 F13
    Date: 2006–10
  5. By: Verbic, Miroslav; Erker, Renata
    Abstract: When the market for a certain good is competitive enough, economic activities can be studied by the market pricing mechanism. Because this is usually not feasible in case of environmental goods with embodied natural and cultural heritage, particular methods for economic valuation of such goods have to be applied. The present article represents the economic valuation of the Landscape Development and Protection Area of Vol誩 Potok, which is an important Slovenian cultural landscape area with internationally recognized characteristics. For this purpose we have chosen the method of contingent valuation and performed an econometric analysis of stated and true willingness-to-pay. We obtained the value of willingness-to-pay and determined its determinants. We also made an attempt to control for different biases that arise in such analyses. At last, we used the adjusted average individual value of willingness-to-pay to calculate the aggregate willingness-to-pay.
    Keywords: bivariate probit model; contingent valuation method; discrete choice method; embedding effects; environmental values; starting point bias; willingness-to-pay
    JEL: Q51 Q56 C51
    Date: 2007–01

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