nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2007‒10‒20
nine papers chosen by
Philip Yu
Hong Kong University

  1. Heterogeneous Impact of the "Seguro Popular" Program on the Utilization of Obstetrical Services in Mexico, 2001-2006: A Multinomial Probit Model with a Discrete Endogenous Variable By Sandra G. Sosa-Rubi; Omar Galarraga; Jeffrey E. Harris
  2. Discrete choices and the trade off between money and time: Another test of the theory of reference dependent preferences By De Borger B.; Mogens F.
  3. Migration Creation, Diversion, and Retention: New Deal Grants and Migration: 1935-1940 By Todd Sorensen; Price V. Fishback; Samuel Allen; Shawn E. Kantor
  4. Averting Regulatory Enforcement: Evidence from New Source Review By Nathaniel Keohane; Erin T. Mansur; Andrey Voynov
  5. A multilevel approach to geography of innovation By Martin Srholec
  6. The Relation between Child Labour and Mothers’ Work: The Case of India By Gianna Claudia Giannelli; Francesca Francavilla
  7. Choosing The Tax Rate in a Linear Income Tax Structure: An Introduction By John Creedy
  8. Efficient and Stable Collective Choices under Gregarious Preferences By Jordi Massó; Antonio Nicolò

  1. By: Sandra G. Sosa-Rubi; Omar Galarraga; Jeffrey E. Harris
    Abstract: Objective: We evaluated the impact of Seguro Popular (SP), a program introduced in 2001 in Mexico primarily to finance health care for the poor. We studied the effect of SP on pregnant women's access to obstetrical services. Data: We analyzed the cross-sectional 2006 National Health and Nutrition Survey (ENSANUT), focusing on the responses of 3,890 women who delivered babies during 2001-2006 and whose households lacked employer-based health care coverage. Methods: We formulated a multinomial probit model that distinguished between three mutually exclusive sites for delivering a baby: a health unit accredited by SP; a clinic run by the Department of Health (Secretaria de Salud, or SSA); and private obstetrical care. Our model accounted for the endogeneity of the household's binary decision to enroll in the SP program. Results: Women in households that participated in the SP program had a much stronger preference for having a baby in a SP-sponsored unit rather than paying out of pocket for a private delivery. At the same time, participation in SP was associated with a stronger preference for delivering in the private sector rather than at a state-run SSA clinic. On balance, the Seguro Popular program reduced pregnant women's attendance at an SSA clinic much more than it reduced the probability of delivering a baby in the private sector. The impacts of the SP program at the individual and population levels varied with the woman's education and health, as well as the assets and location (rural versus urban) of the household. Conclusions: The SP program had a robust, significantly positive impact on access to obstetrical services. Our finding that women enrolled in SP switched from non-SP state-run facilities, rather than from out-of-pocket private services, is important for public policy and requires further exploration.
    JEL: I1 I18 I38 O12 O22 O38 O54
    Date: 2007–10
  2. By: De Borger B.; Mogens F.
    Abstract: We consider binary choices on the trade-off between money and travel time, and formulate a model of reference-dependent preferences based on a linear reference-free utility function. Reference-dependence is captured by value functions that are centered at the reference. The model predicts a particular relationship between four commonly used valuation measures (willingness to pay (WTP), willingness to accept (WTA), equivalent gain (EG) and equivalent loss (EL)), and is has directly testable implications. Moreover, we show that the model allows recovering the underlying reference-free value of time. Based on a large survey data set, we estimate an econometric version of the model, allowing for both observed and unobserved heterogeneity. We find strong supporting evidence for reference-dependence in a series of tests of high statistical power. The gap between WTP and WTA is found to exceed a factor four. Loss aversion plays an important role in explaining responses; moreover, drivers 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.
    Date: 2006–12
  3. By: Todd Sorensen; Price V. Fishback; Samuel Allen; Shawn E. Kantor
    Abstract: During the 1930s the federal government embarked upon an ambitious series of grant programs designed to counteract the Great Depression. The amounts distributed varied widely across the country and potentially contributed to population shifts. 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 suggests that the uneven distribution of New Deal spending explains about twelve percent of the internal migration flows in the United States between 1935 and 1940.
    JEL: J61 N32
    Date: 2007–10
  4. By: Nathaniel Keohane; Erin T. Mansur; Andrey Voynov
    Abstract: This paper explores firms' response to regulatory enforcement. New Source Review, a provision of the Clean Air Act, imposes stringent emissions limitations on significantly modified older power plants. In 1999, the EPA sued owners of 46 plants for NSR violations. We study how electricity companies respond to both the perceived threat of future action, and the action itself. A discrete choice model estimates plants likelihood of being named in lawsuits increases with large historic emissions and investments. On the eve of the lawsuits, emissions at plants with a one standard deviation greater probability of being sued fell approximately ten percent.
    JEL: L51 L94 Q52 Q58
    Date: 2007–10
  5. By: Martin Srholec (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: The aim of this paper is to demonstrate how research on geography of innovation can benefit from multilevel modeling. Using explanatory factors operating at different levels of the analysis, we assess the hypothesis that regional innovation systems influence the firm’s likelihood to innovate. We estimate a logit multilevel model of innovation on micro data from the third Community Innovation Survey in the Czech Republic. The results indicate that the quality of the regional innovation system directly determines firm’s likelihood to innovate and mediates the effect of some firm-level factors. Also structural problems in the region influence innovation in firms.
    Keywords: innovation, multilevel modeling, regional innovation system, Czech Republic.
    JEL: O32 R15 D21
    Date: 2007–10
  6. By: Gianna Claudia Giannelli; Francesca Francavilla
    Abstract: The paper deals with child labour in developing countries. We address a problem that has recently drawn much attention at the international level, that is, how to invest in women’s rights to advance the rights of both women and children. We study the problem from a new perspective. In our theoretical model we assume that the child’s time is an extension of her/his mother’s time, and that she has to decide how to allocate it. We estimate two empirical specifications, both multinomial logit. The first one, in line with the standard approach in the literature, estimates a model of the probability of the different child’s states, conditional on her/his mother’s states. The second empirical specification, in line with our theoretical model, estimates the mother-child states jointly. Using a unique, rich and representative data survey for all Indian states and for urban and rural India (NFHS-2, 1998/9), we select our sample drawing information from the household data set and the women’s data set. Our results show that the presence of the mother in the family increases children welfare, in terms of educational opportunities and protection from work activities. All our results indicate that the mother tends to stay home and send her children to school the better is the father’s employment position and the wealthier is the family. However, we observe a perverse effect. If the mother works, since female job quality and wage levels are very low, also her children have a higher probability to work.
    Keywords: income distribution, inequality trends
    JEL: J13 J22 O15 O18
    Date: 2007–10
  7. By: John Creedy
    Abstract: This paper provides an introduction to modelling the choice of linear income tax rate in both majority voting and social welfare maximising contexts. Although the basic problem in each case — of finding the most preferred tax for the median voter and the welfare maximising tax for an independent judge or decision-maker — can be simply stated, it is usually not possible to obtain explicit solutions even for simple assumptions about preferences and population heterogeneity. The present paper instead gives special attention to a formulation of the required conditions in terms of easily interpreted magnitudes, the elasticity of average earnings with respect to the tax rate and a measure of inequality. The inequality measure takes the same basic form in each model (depending either on median earnings or a weighted average of earnings, where the weights depend on value judgements regarding inequality aversion. The approach enables the comparative static effects of a range of parameter changes to be considered. The results are reinforced using numerical examples based on the constant elasticity of substitution utility function.
    Date: 2007
  8. By: Jordi Massó; Antonio Nicolò
    Abstract: We consider collective choice problems where a set of agents have to choose an alternative from a finite set and agents may or may not become users of the chosen alternative. An allocation is a pair given by the chosen alternative and the set of its users. Agents have gregarious preferences over allocations: given an allocation, they prefer that the set of users becomes larger. We require that the final allocation be efficient and stable (no agent can be forced to be a user and no agent who wants to be a user can be excluded). We propose a two-stage sequential mechanism whose unique subgame perfect equilibrium outcome is an efficient and stable allocation which also satisfies a maximal participation property.
    Keywords: Public Goods, Gregarious Preferences, Subgame Perfect Implementation
    JEL: D62 D71 H41
    Date: 2007–10–15
  9. By: Hillinger, Claude
    Abstract: This paper has two sources: One is my own research in three broad areas: business cycles, economic measurement and social choice. In all of these fields I attempted to apply the basic precepts of the scientific method as it is understood in the natural sciences. I found that my effort at using natural science methods in economics was met with little understanding and often considerable hostility. I found economics to be driven less by common sense and empirical evidence, than by various ideologies that exhibited either a political or a methodological bias, or both. This brings me to the second source: Several books have appeared recently that describe in historical terms the ideological forces that have shaped either the direct areas in which I worked, or a broader background. These books taught me that the ideological forces in the social sciences are even stronger than I imagined on the basis of my own experiences. The scientific method is the antipode to ideology. I feel that the scientific work that I have done on specific, long standing and fundamental problems in economics and political science have given me additional insights into the destructive role of ideology beyond the history of thought orientation of the works I will be discussing.
    Keywords: Business cycles, Ideology, Science, Voting, Welfare measurement
    JEL: B40 C50 D6 D71 E32
    Date: 2007

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