nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2008‒11‒11
three papers chosen by
Philip Yu
Hong Kong University

  1. Using Elicited Choice Probabilities to Estimate Random Utility Models: Preferences for Electricity Reliability By Asher A. Blass; Saul Lach; Charles F. Manski
  2. Asking for Individual or Household Willingness to Pay for Environmental Goods? Implication for aggregate welfare measures By Lindhjem, Henrik; Navrud, Ståle
  3. Internet CV surveys – a cheap, fast way to get large samples of biased values? By Lindhjem, Henrik; Navrud, Ståle

  1. By: Asher A. Blass; Saul Lach; Charles F. Manski
    Abstract: When data on actual choices are not available, researchers studying preferences sometimes pose choice scenarios and ask respondents to state the actions they would choose if they were to face these scenarios. The data on stated choices are then used to estimate random utility models, as if they are data on actual choices. Stated choices may differ from actual ones because researchers typically provide respondents with less information than they would have facing actual choice problems. Elicitation of choice probabilities overcomes this problem by permitting respondents to express uncertainty about their behavior. This paper shows how to use elicited choice probabilities to estimate random utility models with random coefficients and applies the methodology to estimate preferences for electricity reliability in Israel.
    JEL: C25 C42 D12 L51 L94
    Date: 2008–10
  2. By: Lindhjem, Henrik; Navrud, Ståle
    Abstract: The aggregate welfare measure for a change in the provision of a public good derived from a contingent valuation (CV) survey will be much higher if the same elicited mean willingness to pay (WTP) is added up over individuals rather than households. A trivial fact, however, once respondents are part of multi-person households it becomes almost impossible to elicit an “uncontaminated” WTP measure that with some degree of confidence can be aggregated over one or the other response unit. The literature is mostly silent about which response unit to use in WTP questions and in some CV studies it is even unclear which type has actually been applied. We test for differences between individual and household WTP in a novel, web-administered, split-sample CV survey asking WTP for preserving biodiversity in old-growth coniferous forests in Norway. Two samples are asked both types of questions, but in reverse order, followed by a question with an item battery trying to reveal why WTP may differ. We find in a between-sample test that the WTP respondents state on behalf of their households is not significantly different from their individual WTP. However, within the same sample, household WTP is significantly higher than individual WTP; in particular if respondents are asked to state individual before household WTP. Our results suggest that using individual WTP as the response unit would overestimate aggregate WTP, and thus bias welfare estimates in benefit-cost analyses. Thus, the choice of response format needs to be explicitly and carefully addressed in CV questionnaire design in order to avoid the risk of unprofitable projects passing the benefit-cost test
    Keywords: Contingent valuation; household; individual; WTP
    JEL: H41 Q51 Q57
    Date: 2008–01–31
  3. By: Lindhjem, Henrik; Navrud, Ståle
    Abstract: With the current growth in broadband penetration, Internet is likely to be the data collection mode of choice for contingent valuation (CV) and stated preference research in the not so distant future. However, little is known about how this survey mode may influence data quality and welfare estimates. In a controlled field experiment as part of a large national CV survey estimating willingness to pay (WTP) for biodiversity protection plans, we assign two groups sampled from the same panel of respondents, either to an Internet or in-person interview mode. Our design is better able than previous mode comparison studies to isolate measurement effects from sample composition effects. Looking in particular for indications of social desirability bias and satisficing (shortcutting the response process) we find little evidence in our data. We find that the extent of “don’t know”, zeros and protest responses to the WTP question (with a payment card) is very similar between modes. Mean WTP is somewhat higher in the interview sample, though we cannot reject equality on the 10 percent level. We also consider equivalence, i.e. whether the WTP difference is larger than a practically trivial predetermined bound. We can reject that the difference is larger than 30 percent, but fail to reject an equivalency bound of 20 percent on the 10 percent level. Results are quite encouraging for the use of Internet as values do not seem to be significantly different or substantially biased compared to in-person interviews.
    Keywords: Internet; contingent valuation; interviews; mode; willingness to pay
    JEL: H41 Q51
    Date: 2008–04–28

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