nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2009‒04‒13
five papers chosen by
Philip Yu
Hong Kong University

  1. Evaluating Alternative Representations of the Choice Sets in Models of Labour Supply By R. Aaberge; T. Wennemo; U. Colombino
  2. Parameters Heterogeneity in a Model of Labour Supply: Exploring the Performance of Mixed Logit By Ugo Colombino; Marilena Locatelli
  3. Implications of Classification Error for the Dynamics of Female Labor Supply. By M. P. Keane; R. M. Sauer
  5. Multi-Attribute Choice Modeling of Australia’s Rivers and Wetlands: A Meta-Analysis of Ten Years of Research By Roy Brouwer

  1. By: R. Aaberge; T. Wennemo; U. Colombino
    Abstract: During the last two decades, the discrete-choice modelling of labour supply decisions has become increasingly popular, starting with Aaberge et al. (1995) and van Soest (1995). Within the literature...
    Keywords: Discrete choice models, Random utility models, Choice set specification, Labour supply, Prediction performance
    JEL: C51 C52 H31
    Date: 2008–10
  2. By: Ugo Colombino; Marilena Locatelli
    Abstract: In this note we investigate the empirical differences between the Random Utility model with fixed coefficients (Conditional Logit), and the Random Utility model with random coefficients (Mixed Logit). We consider a model of household labour supply developed for a project aimed at the evaluation of alternative Basic Income mechanisms. Data are drawn from the 1998 Bank of Italy survey of household income and wealth (SHIW 1998) and choice alternatives are generated using EUROMOD. We compare the estimates of the Conditional Logit and Mixed Logit. We also compare the respective results from simulating the effects of a Flat Tax reform. Although on average the estimates of Conditional Logit and of Mixed Logit are very close, the Mixed Logit estimates reveal that there is a significant unobserved heterogeneity of preferences. We also compare the simulations of a hypothetical Flat Tax reform. Although the differences are small, yet the results would imply different policy conclusions depending on whether Conditional Logit or Mixed Logit is adopted.
    Keywords: labour supply, conditional logit, mixed logit, unobserved heterogeneity
    JEL: D0 J0
    Date: 2008–11
  3. By: M. P. Keane; R. M. Sauer
    Abstract: Two key issues in the literature on female labor supply are: (1) if persistence in employment status is due to unobserved heterogeneity or state dependence, and (2) if fertility is exogenous to labor supply. Until recently, the consensus was that unobserved heterogeneity is very important, and fertility is endogenous. But Hyslop (1999) challenged this. Using a dynamic panel probit model of female labor supply including heterogeneity and state dependence, he found that adding autoregressive errors led to a substantial diminution in the importance of heterogeneity. This, in turn, meant he could not reject that fertility is exogenous. Here, we extend Hyslop (1999) to allow classification error in employment status, using an estimation procedure developed by Keane and Wolpin (2001) and Keane and Sauer (2005). We find that a fairly small amount of classification error is enough to overturn Hyslop’s conclusions, leading to overwhelming rejection of the hypothesis of exogenous fertility.
    Keywords: Female Labor Supply, Fertility, Discrete Choice, Classification Error, Simulated Maximum Likelihood
    JEL: J2 J6 C3 D1
    Date: 2008–09
    Abstract: This paper analyzes the time allocation of Italian spouses to paid work, childcare and household work. The literature suggests that Italian husbands contribute the least to unpaid household work, relative to other European countries, while Italian women have the lowest market employment rates. We model the three different time uses simultaneously for the two spouses within each household, allowing for corner solutions and correlations in the unobservables across the system of six equations. To estimate the model we use data drawn from the 2002-03 Italian Time Use Survey, combined with earnings information taken from the 2002 Bank of Italy Survey. We conclude that Italian husbands’ time allocation responds to their wife’s attributes: in particular, husbands’ housework time increases with the wage of their wife. On the contrary, the own wage effect is significantly negative for housework of women. Childcare time of fathers increases with own wage and with the presence of small children and this is true both for weekdays and weekends.
    Keywords: Female Labor Supply, Fertility, Discrete Choice, Classification Error, Simulated Maximum Likelihood
    JEL: D1 D13 J21
    Date: 2008–10
  5. By: Roy Brouwer (Institute for Environmental Studies, Department of Environmental Economics, VU University Amsterdam, The Netherlands)
    Abstract: A meta-analysis is presented of the empirical findings of 10 years of choice experiment applications to water and wetland management issues in Australia. A random effects Tobit model is estimated to investigate the suitability of using existing willingness to pay (WTP) values derived from estimated choice models for the purpose of benefits transfer. The random effects model outperforms the fixed effects model in terms of predictive power. An analysis of variance reveals that the survey method, sample size, and statistical model are important determinants of estimation precision and error. The use of different attributes, measurement units and levels in choice experiments makes it hard to compare WTP values for environmental attributes from different studies. The benefits associated with current and possible future use of the water resources are valued significantly higher than the nonuse benefits. Except for the systematically lower values for the Fitzroy, WTP values are more or less transferable across catchments. Other important control variables when transferring the results from choice models across water and wetland policy contexts include income levels of the population of beneficiaries and methodological study characteristics such as the number of choice tasks in the choice experiment.
    Keywords: choice experiments, stated preferences, value transfer, validity
    JEL: Q25 Q51
    Date: 2009–03

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