nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2009‒07‒03
eight papers chosen by
Philip Yu
Hong Kong University

  1. Valuation of life: a study using discrete choice analysis By Zhu, Weichen
  2. Individuals' preferences for GPs Choice analysis from the establishment of a list patient system in Norway By Lurås, Hilde
  3. Are Temporary Jobs a Port of Entry into Permanent Employment? Evidence from Matched Employer-Employee Data By Fabio Berton; Francesco Devicienti; Lia Pacelli
  4. Nurses’ labor supply with endogenous choice of care level and shift type A nested discrete choice model with nonlinear income By Sæther, Erik Magnus
  5. Will increased wages increase nurses' working hours in the health care sector? By Sæther, Erik Magnus
  6. Intermodal Competition in The London-Paris Passenger Market: High-Speed Rail and Air Transport By Christiaan Behrens; Eric Pels
  7. Choice experiment study on the willingness to pay to improve. By Sabah Abdullah; Petr Mariel
  8. The Economic Value of Biodiversity in New Zealand: Results from a Household Survey By Pamela Kaval; Richard Yao; Frank Scrimgeour

  1. By: Zhu, Weichen (Ragnar Frisch Centre for Economic Research)
    Abstract: The focus of this paper is to discuss and compare different approaches to calculate the statistical value of life (VSL) based on survey data. In this paper, we find out that people significantly prefer to reduce the premature death related to the environmental pollution than to reduce the premature death caused by heart disease by using discrete choice technique and estimate a simple logit and ordered logit model. But no significant evidence indicates saving lives from environmental pollution is more preferred than saving lives from traffic accident, or vice versa. VSL is directly calculated from preferences based on our estimates. We try to link the WTP with the random utility framework in this paper. A new way to make use of the information of WTP is introduced. We show that in theory the common estimates on study of the relationship between WTP and other socio-economic variables by using OLS is biased due to the selection problem. By introducing an “instrument variable” into the regression, it’s possible to correct the selection bias.
    Keywords: Statistical value of life; VSL; traffic accident; willingness to pay
    JEL: I18
    Date: 2009–06–14
  2. By: Lurås, Hilde (Institute of Health Management and Health Economics)
    Abstract: The purpose of this paper is to gain more knowledge concerning individuals’ preferences for alternative GPs within a municipality. We have data on the population’s first, second and third choice of GPs. The data stem from the entry form the inhabitant filled in as a result of the implementation of a list patient system in general practice in Norway. To assess the potential demand for GPs3 or individuals’ request for a position on a certain GP’s list, we formulate and estimate a structural demand model based on probabilistic theories of individual choice behaviour. The model originates from the work of Luce (see for instance Luce, 1959 and Block and Marschak, 1960). Such models are successfully used to obtain knowledge of people’s preferences for different transportation vehicles. We raise the question of whether individuals’ choice of GPs is informed or purely random, as well as the question of whether observable demographic characteristics of a GP can tell us anything about the person who wants him or her as a personal physician. We find systematic dependencies between characteristics of an individual and characteristics of his or her choice of a GP. But we also find that the random part plays a major role in the choice process. In the last part of the paper we discuss policy implications of our findings. Central points are both how local health authorities can use the information on rankings to put together collegiums of GPs that serve the need – or the demand – of the inhabitants in the best way, and how a payment system for GPs should be designed if our results should be taken into account.
    Keywords: General practitioner; GP; individual preferences
    JEL: I18
    Date: 2009–06–21
  3. By: Fabio Berton (Department of Public Policy and Public Choice, University of Eastern Piedmont); Francesco Devicienti (Department of Economics and Public Finance "G. Prato", University of Torino); Lia Pacelli (Department of Economics and Public Finance "G. Prato", University of Torino)
    Abstract: Are temporary jobs a port of entry into permanent employment? In this paper we argue that the answer crucially depends on the type of temporary contracts being considered, as the different contracts observed in practice are typically characterized by varying combinations of training, tax-incentives and EPL provisions. We base our empirical evidence on a longitudinal sample of labour market entrants in Italy, a country where a large number of temporary contracts coexist with a relatively high employment protection for standard employees. We estimate dynamic multinomial logit models with fixed effects, to allow for non-random sorting of workers into the different types of contracts. We show that the transition to permanent employment is more likely for individuals holding any type of temporary contracts than for the unemployed, thus broadly confirming the existence of port-of-entry effects. Yet, not all temporary contracts are the same: training contracts are the best port of entry, while freelance contracts are the worst. We also show that temporary contracts are generally a port-of-entry into a permanent position within the same employer, but not across firms, implying that little general-purpose training is gained while on temporary jobs. Moreover, the time needed for an internal transformation from a temporary to a permanent position appears rather long, suggesting that firms are likely to use (a sequence of) temporary contracts as a cost-reduction strategy, rather than as a screening device for newly hired workers.
    Keywords: temporary jobs, port of entry, matched employer-employee data, dynamic multinomial logit models, state dependence, fixed effects
    JEL: J41 J63
    Date: 2009–06
  4. By: Sæther, Erik Magnus (Ragnar Frisch Centre for Economic Research)
    Abstract: Shift work has a documented negative impact on workers’ health and social life, effects which are compensated for with higher wages and shorter working hours. Many countries face a ‘nursing shortage’, and increasing wages is argued to lead to an increase in the short-term labor supply in health care. Omitting shift work in the evaluation of such policies may lead to biased estimates of the wage elasticities. Focusing on registered nurses (RN) employed in the public health sector, this paper presents an econometric analysis that allows the nurses to compose their ‘job package’ in three steps by choosing: a) hospital or primary care, b) daytime or shift work and c) one of four categories of hours. The utility maximization problem is solved by discretizing the budget set and choosing the optimal job package from a finite set of alternatives. The nested structure is estimated on Norwegian micro data. There is some variation in the responsiveness to wage between shift and day workers and by care level. The job-specific elasticities are small but positive. However, the simulation of a wage increase in all job types, when conditioning the analysis to those already participating in the sector, indicates a slight reduction in hours. Thus, the income effect seems to dominate in the labor supply of nurses.
    Keywords: Registered nurses; discrete choice; labor supply; selection; nested logit; sector-specific wages
    JEL: C25 I10 J22
    Date: 2009–06–14
  5. By: Sæther, Erik Magnus (Ragnar Frisch Centre for Economic Research)
    Abstract: Many registered nurses (RNs) in Norway work part-time, or in non-health jobs. The nurses’ trade organizations claim that a wage increase will increase the short-term labor supply in health care. This paper is an attempt to identify the effects of job-type specific wage increases through policy simulations on micro data. The individual’s labor supply decision can be considered as a choice from a set of discrete alternatives (job packages). These job packages are characterized by attributes such as hours of work, sector specific wages and other sector specific aspects of the jobs. The unique data set covers all RNs registered in Norway and their families. The spouses’ incomes and age of the children are vital when estimating the labor supply of this profession. For married females the results indicate job type specific wage elasticities for hours of work of 0.17 in hospitals and 0.39 in primary care. The total hours worked in health and non-health jobs are actually predicted to be slightly reduced, but the change is not significantly different from zero. Single females are somewhat more responsive to wage changes than married ones.
    Keywords: Registered nurses; discrete choice; non-convex budget sets; labor supply; sector-specific wages
    JEL: C25 I10 J22
    Date: 2009–06–14
  6. By: Christiaan Behrens (VU University Amsterdam); Eric Pels (VU University Amsterdam)
    Abstract: This paper studies inter- and intramodal competition in the London-Paris passenger market. Using revealed preference data, we estimate nested and mixed multinomial logit models to examine passenger behaviour in the London-Paris market. We present a case study on the relocation of Eurostar services from Waterloo International to St Pancras International station. The results show that competition is present in this market. Demand is elastic, and passengers are heterogeneous in their valuation of fares and accessibility. Aviation and high-speed rail are homogenous in unobserved effects. The large market share of the Eurostar and the withdrawal of aviation alternatives indicate that competition will decline in the long-run.
    Keywords: inter- and intramodal competition; nested logit; mixed logit; aviation; rail
    JEL: R40 R41
    Date: 2009–06–08
  7. By: Sabah Abdullah (University of Bath, UK); Petr Mariel (Universidad del País Vasco)
    Abstract: Modern forms of energy are an important vehicle towards poverty alleviation in rural areas of developing countries. Most developing countries’ households heavily rely on wood fuel which impact their health and social–economic status. To ease such a dependency, other modern forms of energy, namely electricity, need to be provided. However, the quality of the electricity service, namely reliability, is an important factor in reducing this dependency. This paper discusses a choice experiment valuation study conducted among electrified rural households located in Kisumu, Kenya, in which the willingness to pay (WTP) to avoid power outages or blackouts was estimated. A mixed logit estimation was applied to identify the various socio-economic and demographic characteristics which determine preferences to reduce power outages among a household’s users. In conclusion, several of the socio-economic and demographic characteristics outlined in this paper were identified and can assist service differentiation to accommodate the diverse households’ preferences towards the improvement of the electricity service.
    Keywords: developing country, rural, power outages, willingness to pay, random parameter logit
    JEL: Q56 C25
    Date: 2009–06–19
  8. By: Pamela Kaval (University of Waikato); Richard Yao (University of Waikato); Frank Scrimgeour (University of Waikato)
    Abstract: This paper presents the results of a national study examining the economic value of biodiversity in New Zealand. Three valuation techniques were used to collect information from respondents: the contingent valuation method, the well-being method and the choice modelling method. Results revealed that respondents were familiar with the native plants and animals in their areas and valued them highly, therefore having a strong value for native biodiversity.
    Keywords: native biodiversity; New Zealand; choice modelling; contingent valuation; well-being; community volunteers
    JEL: Q57 Q2 Q25
    Date: 2009–06–25

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