nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2007‒03‒24
eleven papers chosen by
Philip Yu
Hong Kong University

  1. On linking microsimulation and applied GE by exact aggregation of heterogeneous discrete-choice making agents By Riccardo Magnani; Jean Mercenier
  2. Maternal Employment and Childhood Obesity in Spain By Emma García; José M. Labeaga; Ana Carolina Ortega Masagué
  3. Felicidad y expectativas By JF Mochón; Namkee Ahn
  4. A Proposal to Distinguish State Dependence and Unobserved Heterogeneity in Binary Brand Choice Models By José M. Labeaga; Mercedes Martos-Partal
  5. Statut résidentiel et durée de chômage : une comparaison microéconométrique entre la Grande-Bretagne et la France By Carole Brunet; Andrew Clark; Jean-Yves Lesueur
  6. Network Effects in R&D Partnership Evidence from the European Collaborations in Micro and Nanotechnologies By Corinne Autant-Bernard; Pascal Billand; Christophe Bravard; Nadine Massard
  7. External Linkages and Contagion Risk in Irish Banks By Srobona Mitra; Elena Duggar
  8. Household-level Credit Constraints in Urban Ethiopia By Gamal Ibrahim; Abbi Kedir; Sebastian Torres
  9. Informal care and labour force participation among middle-aged women in Spain By David Casado; Pilar García Gómez; Ángel López
  10. Waiting Tolerance: Ramp Delay vs. Freeway Congestion By David Levinson; Kathleen Harder; John Bloomfield; Kathy Carlson
  11. The relative income hypothesis: does it exist over time? Evidence from the BHPS. By Joanne Kathryn Lindley; Paula Lorgelly

  1. By: Riccardo Magnani (Université de Cergy-Pontoise (Théma)); Jean Mercenier (Université de Cergy-Pontoise (Théma))
    Abstract: Our paper contributes to bridge the gap between the microsimulation’s approach and applied GE models, by making use of exact aggregation results from the discrete choice literature: heterogeneous individuals choosing (possibly continuous amounts) within a set of discrete alternatives may be aggregated into a representative agent with CES/CET preferences/technologies. These results therefore provide a natural link between the two policy evaluation approaches. We illustrate the usefulness of these results by evaluating potential effects of population ageing on the dynamics of income distribution and inequalities, using a simple OLG model when individuals have to make leisure/work decisions, and choose a profession among a discrete set of alternatives.
    Keywords: Microsimulation; Applied OLG models; Exact aggregation; Discrete choice; Population ageing; Income inequality
    JEL: C63 C68 C81 D31 D58 E17 J10 J22
    Date: 2007
  2. By: Emma García; José M. Labeaga; Ana Carolina Ortega Masagué
    Abstract: In this paper we explore to which extent the increase in childhood overweight and obesity are consequences of the participation of mothers in the labour market. We think that the increase in female labor force participation can explain, at least in part, the observed increase in the prevalence of overweight and obesity among children. Since it is very difficult to establish causal effects between both variables, we intend to measure it indirectly by using discrete choice models. Our results confirm that maternal employment could be at the root of this personal and social problem, which in absence of specific measures from several fields could become epidemic in the next decades. Otherwise, individuals' quality of life could be threatened, and expenditure devoted to control or alleviate this health problem could put pressure on the sustainability of the National Health System in the future.
  3. By: JF Mochón; Namkee Ahn
    Abstract: Los seres humanos son los unicos capaces de formular expectativas razonadas sobre su propia situación futura, y ademas estas expectativas inciden sobre la felicidad. A pesar de ello se cuenta con muy poca evidencia empírica sobre la relación entre las expectativas y la felicidad. En este trabajo se analiza, para el caso de la sociedad española, la incidencia de las expectativas sobre la felicidad. Los resultados obtenidos son consistentes con la literatura sobre felicidad. Esto es así tanto para el caso de las variables tradicionales tales como edad, estado civil, nivel educativo, salud, relaciones sociales, situación laboral, nivel de renta o religión, como cuando se incluyen las expectativas como variable explicativa. Cuando las expectativas son favorables se correlacionan positivamente con la satisfacción de los individuos, mientras que si las expectativas son desfavorables la correlación es negativa. Cuando las expectativas se refieren a ambitos específicos tales como el trabajo, la renta o la salud los resultados tambien son los esperados. Al aislar el efecto de las expectativas, de la personalidad de los individuos y de su experiencia pasada los resultados son los siguientes. El optimismo a corto plazo tiene un efecto positivo y significativo sobre la felicidad y los individuos que han progresado económicamente se sienten moderadamente más felices mientras que los que han empeorado se sienten más infelices. Por lo tanto, incluso cuando de las expectativas se separa el efecto de la personalidad de los individuos y el impacto de la mejora o progreso, las expectativas tienen una incidencia significativa y relevante sobre la felicidad.
  4. By: José M. Labeaga; Mercedes Martos-Partal
    Abstract: This paper uses binary choice models that specify four possible sources of observed regularity in the consumer brand choice decision over purchase occasion: namely, state dependence, observed and unobserved heterogeneity and correlation effects. The objective is to distinguish correctly among the effects of these four variables. The estimation method proposed is an alternative to the most commonly used estimation methods in marketing choice models. We consider that the alternative method appropriately controls for observed heterogeneity and unobserved heterogeneity correlated with the state dependence variable because of the way the state dependence variable is built. The model is used for the first time in marketing following the methodology proposed by Chamberlain (1984). A relationship for unobserved heterogeneity is specified, taking into account the correlation among unobserved heterogeneity and other choice determinants. In this way, we split the influence of household state dependence and tastes on brand choice. The findings are very conclusive. We find that because the individual effects and the covariates are correlated, traditional estimation methods cannot be used to split state dependence and unobserved heterogeneity. The proposed model is found to yield better measures of predictive performance than the conventional model. The results are found to be robust across categories of laundry detergent and have significant implications for marketing policy.
  5. By: Carole Brunet (GATE CNRS); Andrew Clark (DELTA CNRS); Jean-Yves Lesueur (GATE CNRS)
    Abstract: The objective of this paper is to provide microeconomic evidence for the so called “Oswald’s hypothesis”, which is whether homeownership results in negative outcomes in the labour market. To estimate this effect we use two data base, comparing results from British Household Permanent Survey and French part of European Household Panel Survey. In a first step, a multinomial logit model for the choice of tenure status is estimated. Estimated probabilities of being either homeowner, public or private renter are then used to explain the length of an individual unemployment spell. This flexible method of estimation accounts for both censoring and selection bias, without constraining the shape of the hazard rate of leaving unemployment. Results suggested strong differences between French and British household behaviour. Home-ownership has a positive effect on unemployment duration in France but no significant effect is detected in Britain. However we find a positive impact of public renters on unemployment duration in Britain. These stylised facts seems to confirm the existence of a real spillover effect between labour market and housing market
    Keywords: unemployment duration, mobility, residential status
    JEL: C41 J6 R21
    Date: 2006–11
  6. By: Corinne Autant-Bernard (CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - [CNRS : FRE2938] - [Université Jean Monnet - Saint-Etienne]); Pascal Billand (CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - [CNRS : FRE2938] - [Université Jean Monnet - Saint-Etienne]); Christophe Bravard (CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - [CNRS : FRE2938] - [Université Jean Monnet - Saint-Etienne]); Nadine Massard (CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - [CNRS : FRE2938] - [Université Jean Monnet - Saint-Etienne])
    Abstract: Based on the research projects submitted to the 6th Framework Program of the European Union, this paper studies cooperative networks in micro and nanotechnologies. Our objective is twofold. First, using the statistical tools of the social network analysis, we characterise the structure of the R&D collaborations established between firms. Second, we investigate the determinants of this structure, by analysing the individual choices of cooperation. A binary choice model is used to put forward the existence of network effects alongside other microeconomic determinants of cooperation. Our findings suggest that network effects are present, so that probability of collaboration is influenced by each individual's position within the network. It seems that social distance matters more than geographical distance. We also provide some evidence that similar firms (in terms of research potential) are more likely to collaborate together
    Keywords: Network formation; R&D collaboration; Knowledge externalities; nanotechnologies
    Date: 2007–03–19
  7. By: Srobona Mitra; Elena Duggar
    Abstract: The large and growing international linkages of big Irish banks expose them to idiosyncratic shocks arising in other countries. We analyze international interdependencies of Irish banks-during both normal times and in periods of large shocks or extreme events-using an existing methodology with distance to default (DD) data constructed from the banks' equity prices. The data covers daily observations from January 1994 to November 2005. We first construct rolling correlations between DDs of Irish banks and those of banks from other European countries and the U.S. to analyze trends in cross-country interdependencies. We then use a multinomial logit model to estimate the number of banks in Ireland that experience a large shock on the same day as banks in other countries ("coexceedances"), controlling for Ireland-specific and global factors. We find evidence of increasing cross-border interdependencies over time; differing interlinkage patterns in the pre-Euro, post-Euro, and the post-September 11th periods; and significant cross-border contagion risk from the United Kingdom, the United States, and the Netherlands. This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
    Keywords: Contagion risk , distance to default , Ireland , Banking , Ireland , Risk management , International financial system , Economic models ,
    Date: 2007–02–28
  8. By: Gamal Ibrahim; Abbi Kedir; Sebastian Torres
    Abstract: Empirical evidence on determinants of credit constraints and the amount borrowed by urban household in Sub-Saharan Africa is almost non-existent. Using an extended direct approach by virtue of the unique data set we have (the Fourth Round Ethiopian Urban Household Survey), we analysed the determinants of credit constraints and the amount borrowed by urban households. We find a high percentage of credit-constrained households, the majority of which constitute discouraged borrowers. Discrete choice models that control for potential endogeneity and selectivity bias have been fitted to our data. Our analysis shows current household resources, number of dependants, and location as significant correlates.
    Keywords: credit constrained households; credit rationing; endogeneity; instrumental variables; urban Ethiopia; Africa
    JEL: D12 O12 O55
    Date: 2007–03
  9. By: David Casado; Pilar García Gómez; Ángel López
    Abstract: Informal care is today the form of support most commonly used by those who need other people in order to carry out certain activities that are considered basic (eating, dressing, taking a shower, etc.), in Spain and in most other countries in the region. The possible labour opportunity costs incurred by these informal carers, the vast majority of whom are middle-aged women, have not as yet been properly quantified in Spain. It is, however, crucially important to know these quantities at a time when public authorities appear to be determined to extend the coverage offered up to now as regards long-term care. In this context, we use the Spanish subsample of the European Community Household Panel (1994- 2001) to estimate a dynamic ordered probit and so attempt to examine the effects of various types of informal care on labour behaviour. The results obtained indicate the existence of labour opportunity costs for those women who live with the dependent person they care for, but not for those who care for someone outside the household. Furthermore, whereas caregiving for more than a year has negative effects on labour force participation, the same cannot be said of those who “start caregiving” and “stop caregiving”.
    Keywords: informal care, female labour force participation, panel data models, ECHP, attrition bias
    JEL: J14 J2 I10
  10. By: David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota); Kathleen Harder; John Bloomfield (College of Architecture and Landscape Architecture, University of Minnesota); Kathy Carlson
    Abstract: Waiting tolerance at ramp meters and travel time on the freewaywere measured using a computer administered stated preference (CASP) survey and a virtual experience stated preference (VESP) methodemploying a driving simulator.The selections varied in the number of minutes waiting at a ramp meter with vehicle speed once on the freeway. The subjects ranked the selections in order of preference. The results were statistically analyzed using a binary logit model controlling for demographics, socioeconomic characteristics, daily travel time, and personality scores.The results by the CASP method displayed a preference for freeway congestion to ramp delay, but opposite results were obtained by the VESP method. A number of reasons are posited to explain the difference, but the results indicate that method of stated preference data collection can significantly affect conclusions drawn.
    Keywords: Ramp meters; Personality; Stated preference; Driving simulator; Travel time
    JEL: R40 R48 D1 D8 C91
    Date: 2006
  11. By: Joanne Kathryn Lindley; Paula Lorgelly (Department of Economics, The University of Sheffield)
    Abstract: The relative income hypothesis suggests that income inequality has a detrimental affect on people´s health. This previously well accepted relationship has recently come under scrutiny. Some claim it is a statistical artefact, while others argue that aggregate level data are not sophisticated enough to adequately test for its existence. This paper adds to the debate by estimating the relationship between income inequality and health using panel data. A random effects ordered probit is used to estimate the relationship between net household income, regional income inequality and self-reported health, for 3736 individuals over 9 years, while controlling for individual socioeconomic characteristics like gender, social class and age. Significant differences in income inequality across regions and considerable changes in health are found across years, however, the panel data estimating regressions find no significant association between any of the measures of income inequality and self-reported health. Therefore, it would appear that the relative income hypothesis does not exist over time and does not exist within Britain.
    Keywords: Self rated health, income inequalities, random effects ordered probit, BHPS
    Date: 2005–06

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