nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2007‒10‒06
seven papers chosen by
Philip Yu
Hong Kong University

  1. Eco-driving? A discrete choice experiment on valuation of car attributes By Högberg, Martina
  2. Simplified Implementation of the Heckman Estimator of the Dynamic Probit Model and a Comparison with Alternative Estimators By Wiji Arulampalam; Mark B. Stewart
  3. Choice of currency in bond issuance and the international role of currencies By Nikolaus Siegfried; Emilia Simeonova; Cristina Vespro
  4. Living-arrangement and university decisions of Dutch young adults By Carla Sá; Raymond Florax; Piet Rietveld
  5. The Persistence of Welfare Participation By Andrén, Thomas
  6. Retard de scolarisation au Banglash : une analyse économétrique. By Hayfa Grira
  7. Migration Creation, Diversion, and Retention: New Deal Grants and Migration: 1935-1940 By Todd Sorensen; Price Fishback; Samuel Allen; Shawn Kantor

  1. By: Högberg, Martina (Swedish Energy Agency)
    Abstract: To elicit the value that car consumers place upon environmental concerns when purchasing a car, a certain type of Discrete Choice Modelling called Choice Experiment was used. The Choice Experiment includes the four car attributes safety, carbon dioxide emissions, acceleration and annual cost. The survey was sent to a random sample of 1500 people in Sweden between 25 and 50 years of age in October 2006. The data collected was incorporated in a binomial logit model from which the coefficients of the utility function for cars were estimated. Both the estimated values of Willingness to Pay and the Marginal Rates of Substitution gave indications that the private goods safety and acceleration are higher valued than a genuine public bad such as carbon dioxide emissions. The result also showed that the design of the Choice Experiment can have impact on the values obtained.
    Keywords: Willingness to Pay; Discrete Choice Experiment; Environmental Valuation
    JEL: C42 Q50
    Date: 2007–09–27
  2. By: Wiji Arulampalam (University of Warwick and IZA); Mark B. Stewart (University of Warwick)
    Abstract: This paper presents a convenient shortcut method for implementing the Heckman estimator of the dynamic random effects probit model using standard software. It then compares the three estimators proposed by Heckman, Orme and Wooldridge based on three alternative approximations, first in an empirical model for the probability of unemployment and then in a set of simple simulation experiments.
    Keywords: dynamic discrete choice models, initial conditions, dynamic probit, panel data
    JEL: C23 C25 C13 C51
    Date: 2007–09
  3. By: Nikolaus Siegfried (Thames River Capital LLP, 51 Berkeley Square, London W1J 5BB, United Kingdom.); Emilia Simeonova (Columbia University, 2960 Broadway, New York, NY 10027-6902, USA.); Cristina Vespro (ISS Governance Services - RiskMetrics Group, Chaussée de la Hulpe 181, B-1170, Brussels, Belgium.)
    Abstract: This paper investigates bond issuance of non-financial corporations in advanced economies during the period 1999-2003, attempting to understand motives for issuing in foreign currency, and determinants for the choice of currency. We consider the following influences on the currency choice when issuing foreign currency denominated debt: the microeconomic characteristics of the firm, the macroeconomic institutional environment and the financial particularities of the bond issue. We find that in addition to cost minimisation, hedging motives and the desire to establish an investor base influences the choice of currency. At the same time, market conventions and regulation also affect the choice. JEL Classification: C25, E44, F23, G32.
    Keywords: Bond issuance, Foreign currency denominated debt, Panel logit, nested logit, conditional logit.
    Date: 2007–09
  4. By: Carla Sá (Universidade do Minho - NIPE); Raymond Florax (Purdue University and Vrije Universiteit Amsterdam); Piet Rietveld (Vrije Universiteit Amsterdam and Tinbergen Institute)
    Abstract: This paper analyses the nature of university and living-arrangement decisions at the example of Dutch students with a secondary education academic diploma. A random utility maximization nested logit model of living-arrangement and university decisions is estimated, allowing for distance and rent e¤ects to vary according to the decision on whether to stay at parental home. Estimation results show that distance deters both at-homers and out-homers. Dutch youngsters are guided by consumption motives, rather than investment motives. They appear to attend university where their high school mates do. Tight housing markets lower the probability of choosing a given university. Male and low income students stay longer with parents, as do those with non-Dutch parents.
    Keywords: living arrangements, university choice, random utility maximization, nested logit
    JEL: C25 D85 I2 J24 R00
    Date: 2007
  5. By: Andrén, Thomas (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Welfare persistence is estimated in and compared between Swedish-born and foreignborn households. This is done within the framework of a time-stationary dynamic discrete choice model controlling for the initial condition and unobserved heterogeneity. Three different types of persistence are controlled for in terms of observed and unobserved heterogeneity, serial correlation, and structural state dependence, the focus being on the latter measure. In a second step we analyze the long-run effects of receiving social assistance on future household earnings and disposable income. The results show that state dependence in Swedish welfare participation is strong in both Swedish-born and foreign-born. However, the size of the effect is three times as large for the latter group. When the effect is distributed over time, it disappears after three years for both groups. The effect of structural state dependence is decomposed into a number of observed explanatory factors. Surprisingly small effects are found from typical foreign-born factors such as time in the country and country of origin, both important determinants for welfare participation in general. When investigating the effect of social assistance participation on future earnings, we find a strong and persistent effect over the whole observation window, while no such effect could be found for disposable income. This indicates that the economic incentives to leave the dependency are very weak. The picture is similar for both Swedish-born and foreign-born, even though the negative earnings effect is somewhat larger for the latter.<p>
    Keywords: welfare participation; immigrants; dynamic probit model; persistence; state dependence; unobserved heterogeneity; initial condition; GHK simulator; earnings; disposable income
    JEL: I30 I38 J18
    Date: 2007–09–28
  6. By: Hayfa Grira (Centre d'Economie de la Sorbonne)
    Abstract: This paper attempts to understand why children often delay school enrolment despite the prediction of human capital theory that schooling should begin at the earliest possible age. We explore different explanations of delayed enrolment but focus particularly on the effect of child health on the timing of human capital investment and on ultimate attainment. We improve on past studies in a number of ways mainly by incorporating into our analysis the endogenous nature of child health, the discrete nature of dependent variable and mainly by correcting for the problem of censoring variables. Using the Matlab Health and Socioeconomic Survey conducted in Bangladesh (1996), our results strongly suggest that early childhood malnutrition is the cause of delayed enrolment. Our estimation results suggest that the cost of three years average delayed enrolment is about 23 % of individual life-time wealth.
    Keywords: Bangladesh, anthropometry, censored ordered probit, delayed enrolment, duration models.
    JEL: I12 I21 J13 C21 C24
    Date: 2007–02
  7. By: Todd Sorensen (University of California, Riverside and IZA); Price Fishback (University of Arizona); Samuel Allen (Virginia Military Institute); Shawn Kantor (University of California, Merced)
    Abstract: During the 1930s the federal government embarked upon an ambitious series of grant programs designed to counteract the Great Depression. Public works and relief programs combated unemployment by hiring workers and building social overhead capital while the Agricultural Adjustment Administration (AAA) sought to raise farm incomes by paying farmers not to produce. The amounts distributed varied widely across the country and potentially contributed to population shifts. We examine the extent to which New Deal spending affected domestic migration patterns in the second half of the 1930s. We estimate an aggregate discrete choice model, in which household heads choose among 466 economic subregions. The structural model allows us to decompose the effects of program spending on migration into three categories: the effect of spending on keeping households in their origin (retention), the effect of pulling non-migrants out of their origin (creation), and the effect of causing migrants to substitute away from an alternative destination (diversion). An additional dollar of public works and relief spending increased net migration into an area primarily by retaining the existing population and creating new migration into the county. Only a small share of the increase in net migration rate was caused by diversion of people who had already chosen to migrate. AAA spending contributed to net out migration, primarily by creating new out migrants and repelling potential in migrants. A counterfactual analysis that examines what would have happened had there been no New Deal spending during the 1930s suggests that the uneven distribution of New Deal public works and relief spending explains about twelve percent of the internal migration flows in the United States between 1935 and 1940. The uneven distribution of AAA spending accounted for about one percent.
    Keywords: migration, New Deal, discrete choice
    JEL: J10 N32 O15 R23
    Date: 2007–09

This nep-dcm issue is ©2007 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.