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on Discrete Choice Models |
| By: | Fosgerau, Mogens; Bierlaire, Michel |
| Abstract: | We propose a multiplicative specification of a discrete choice model that renders choice probabilities independent of the scale of the utility. The scale can thus be random with unspecified distribution. The model mostly outperforms the classical additive formulation over a range of stated choice data sets. In some cases, the improvement in likelihood is greater than that obtained from adding observed and unobserved heterogeneity to the additive specification. The multiplicative specification makes it unnecessary to capture scale heterogeneity and, consequently, yields a significant potential for reducing model complexity in the presence of heteroscedasticity. Thus the proposed multiplicative formulation should be a useful supplement to the techniques available for the analysis of discrete choices. There is however a cost to be paid in terms of increased analytical complexity relative to the additive formulations. |
| Keywords: | Multivariate extreme value; logsum |
| JEL: | C25 |
| Date: | 2007–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3901&r=dcm |
| By: | Francesco Bartolucci† (Dipartimento di Economia, Finanza e Statistica, Universit`a di Perugia.); Valentina Nigro (Dipartimento di Studi Economico-Finanziari e Metodi Quantitativi, Universit`a di Roma “Tor Vergata”) |
| Abstract: | A model for binary panel data is introduced which allows for state dependence and unobserved heterogeneity beyond the effect of strictly exogenous covariates. The model is of quadratic exponential type and its structure closely resembles that of the dynamic logit model. An economic interpretation of its assumptions, based on expectation about future outcomes, is provided. The main advantage of the proposed model, with respect to the dynamic logit model, is that each individual-specific parameter for the unobserved heterogeneity may be eliminated by conditioning on the sum of the corresponding response variables. A conditional likelihood results which allows us to identify the structural parameters of the model with at least three observations (included an initial observation assumed to be exogenous), even in the presence of time dummies. A pn-consistent conditional estimator of these parameters also results which is very simple to compute. Its finite sample properties are studied by means of a simulation study. Extensions of the proposed approach are discussed with reference, in particular, to the case of more elaborated structures for the state dependence and to that of categorical response variables with more than two levels. |
| Date: | 2007–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:97&r=dcm |
| By: | Fosgerau, Mogens; Hjort, Katrine; Vincent Lyk-Jensen, Stéphanie |
| Abstract: | Models such as the mixed logit are often used to measure the distribution of the marginal value of a good based on discrete choice panel data. There are however serious specification and identification issues that are rarely addressed. The consequences for results may be dramatic. This paper points out the issues and presents an approach to dealing with them that may be applied under some circumstances. The issues and the approach are illustrated using a dataset designed to measure the value of travel time. |
| Keywords: | Discrete choice; valuation; mixed logit |
| JEL: | C35 R41 C14 Q51 |
| Date: | 2007–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3907&r=dcm |
| By: | Patrick Bayer; Fernando Ferreira; Robert McMillan |
| Abstract: | This paper develops a comprehensive framework for estimating household preferences for school and neighborhood attributes in the presence of sorting. It embeds a boundary discontinuity design in a heterogeneous model of residential choice to address the endogeneity of school and neighborhood attributes. The model is estimated using restricted-access Census data from a large metropolitan area, yielding a number of new results. First, households are willing to pay less than one percent more in house prices -- substantially lower than previous estimates -- when the average performance of the local school increases by five percent. Second, much of the apparent willingness to pay for more educated and wealthier neighbors is explained by the correlation of these sociodemographic measures with unobserved neighborhood quality. Third, neighborhood race is not capitalized directly into housing prices; instead, the negative correlation of neighborhood race and housing prices is due entirely to the fact that blacks live in unobservably lower quality neighborhoods. Finally, there is considerable heterogeneity in preferences for schools and neighbors: in particular, we find that households prefer to self-segregate on the basis of both race and education. |
| JEL: | H0 H4 H72 R0 R21 R31 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13236&r=dcm |
| By: | Tommaso Proietti (Universita di Roma “Tor Vergata”); Cecilia Frale (Universita di Roma “Tor Vergata”) |
| Abstract: | In this paper we deal with several issues related to the quantification of business surveys. In particular, we propose and compare new ways of scoring the ordinal responses concerning the qualitative assessment of the state of the economy, such as the spectral envelope and cumulative logit unobserved components models, and investigate the nature of seasonality in the series. We conclude with an evaluation of the type of business cycle fluctuations that is captured by the qualitative surveys. |
| Keywords: | Spectral envelope; Seasonality; Deviation cycles; Cumulative Logit Model. |
| Date: | 2007–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:98&r=dcm |
| By: | Blos, Kerstin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Feil, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Rudolph, Helmut (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Walwei, Ulrich (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Wiemers, Jürgen (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "In diesem Forschungsbericht werden die wesentlichen Effekte der Einführung des Bofinger-Walwei-Vorschlags zur Neuordnung des Niedriglohnsektors in Deutschland untersucht. Der Vorschlag enthält drei Kernelemente: (1) Die Senkung der Sozialversicherungsbeiträge für bedürftige Geringverdiener; (2) die Beseitigung der bevorzugten abgaben- und steuerrechtlichen Behandlung von Mini- und Midi-Jobs sowie (3) eingeschränkte Hinzuverdienstmöglichkeiten für Empfänger des ALG II. Wir verwenden zwei Mikrosimulationsmodelle, um Arbeitsangebots-, Verteilungs- und fiskalische Effekte des Reformvorschlags abzuschätzen. Die Mikrosimulationsmodelle basieren auf unterschiedlichen Datensätzen, nämlich dem Sozio-ökonomischen Panel 2004 und der Einkommens- und Verbrauchsstichprobe 2003. Es werden sowohl 'morning after'-Effekte, also Verteilungs- und fiskalische Effekte ohne Berücksichtigung von möglichen Verhaltensanpassungen, als auch langfristige Effekte simuliert. Letztere berücksichtigen die zu erwartenden Arbeitsangebotsreaktionen nach Einführung der Reform. Die Arbeitsangebotsreaktion wird mit Hilfe eines discrete choice-Modells für unterschiedliche Haushaltstypen geschätzt. Die Simulationen zeigen eine moderate Erhöhung des Arbeitsangebots (55.000 Personen in Vollzeitäquivalenten) und nahezu durchgehend insignifikante Partizipationseffekte. Die fiskalischen Effekte sind vernachlässigbar, da die zusätzlichen Transfers, die sich aus Element (1) des Vorschlags ergeben, näherungsweise durch die reduzierten Transfers kompensiert werden, die sich aus den Elementen (2) und (3) ergeben. Die Verteilungsanalyse zeigt, dass Haushalte, die bereits im Status Quo Transfers beziehen, sich im allgemeinen schlechter stellen, während Haushalte, deren Status Quo-Einkommen zu hoch ist, um einen Alg II-Anspruch zu erwerben, von der Reform profitieren." (Autorenreferat, IAB-Doku) |
| Date: | 2007–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabfob:200707&r=dcm |
| By: | Colignatus, Thomas |
| Abstract: | Various scientists under the label of “Scientists for a democratic Europe” (SDE) sent a joint “Letter to the governments of the EU member states” (2007) advising the use of the Penrose Square Root Weights (PSRW) for the EU Council of Ministers. When we compare the SDE letter with Colignatus (2001, 2007b) “Voting theory for democracy” (VTFD) then we find that SDE does not fit voting theory for democracy. Inspection of the material upon which the SDE letter is based also shows a moral choice while the rigorous empirical analysis by Gelman, Katz and Bafumi (2007) is actually misrepresented. So the SDE letter can also be rejected on its own grounds. The PSRW approach seems not valid for (indivisible) individuals but may be applicable for divisible shares in shareholder meetings. |
| Keywords: | voting theory; voting systems; elections; public choice; political economy; Borda Fixed Point; democracy; European Union; Penrose square root weights; |
| JEL: | D71 A2 H0 |
| Date: | 2007–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3885&r=dcm |
| By: | De Borger, Bruno; Fosgerau, Mogens |
| Abstract: | We formulate a model of reference-dependent preferences based on the marginal rate of substitution at the reference-point of a reference-free utility function. Using binary choices on the trade-off between money and travel time, reference-dependence is captured by value functions that are centered at the reference. The model predicts a directly testable relationship among four commonly used valuation measures (willingness to pay (WTP), willingness to accept (WTA), equivalent gain (EG) and equivalent loss (EL)). Moreover, we show that the model allows recovering the underlying ‘reference-free’ value of time. This provides a potential solution to the issue of which measure to use for public policy evaluation. Based on a large survey data set, we estimate an econometric version of the model, allowing for both observed and unobserved heterogeneity. In a series of tests of high statistical power, we find that the relationship among the four valuation measures conforms to our model and that the constraints on the parameters implied by the model are met. The gap between WTP and WTA is found to be a factor of four. Loss aversion plays an important role in explaining responses; moreover, participants are more loss averse in the time dimension than the cost dimension. We further find evidence of asymmetrically diminishing sensitivity. Finally, we show that the fraction of ´mistakes`, in the sense that participants are observed to sometimes select dominated options, varies systematically in a way consistent with the model of reference-dependence. |
| Keywords: | Reference-dependence; loss aversion; WTP-WTA gap; value of time |
| JEL: | C25 D01 |
| Date: | 2007–01–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3904&r=dcm |
| By: | Fosgerau, Mogens; Nielsen, Søren Feodor |
| Abstract: | Let U be an unobserved random variable with compact support and let e_t be unobserved i.i.d. random errors also with compact support. Observe the random variables V_t, X_t, and Y_t = 1{U +d X_t+e_t < V_t}, t <= T, where d is an unknown parameter. This type of model is relevant for many stated choice experiments. It is shown that under weak assumptions on the support of U +e_t, the distributions of U and e_t as well as the unknown parameter d can be consistently estimated using a sieved maximum likelihood estimation procedure. The model is applied to simulated data and to actual data designed for assessing the willingness-to-pay for travel time savings. |
| Keywords: | semi-nonparametric; nonparametric; method of sieves; binomial panel; willingness-to-pay; value of time |
| JEL: | C23 R41 D12 C14 Q51 C25 |
| Date: | 2007–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3950&r=dcm |