nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2009‒07‒11
six papers chosen by
Philip Yu
Hong Kong University

  1. Combining discrete and continuous representations of preference heterogeneity: a latent class approach By Angel Bujosa Bestard; Antoni Riera Font; Robert L. Hicks
  2. Forestland Reform in China: What do the Farmers Want? A Choice Experiment on Farmers’ Property Rights Preferences By Qin, Pin; Carlsson, Fredrik; Xu, Jintao
  3. A Discrete Choice Analysis of Norwegian Physicians’ Labor Supply and Sector Choice By Sæther, Erik Magnus
  4. Public- and private-good values of statistical lives Results from a combined choice-experiment and contingent-valuation survey By Strand, Jon
  5. Business Aviation in Germany: An empirical and model-based analysis By Berster, Peter; Gelhausen, Marc Christopher; Wilken, Dieter
  6. Identifying Heterogeneity in Economic Choice Models By Jeremy T. Fox; Amit Gandhi

  1. By: Angel Bujosa Bestard (Centre de Recerca Econòmica (UIB · Sa Nostra)); Antoni Riera Font (Centre de Recerca Econòmica (UIB · Sa Nostra)); Robert L. Hicks (The College of William and Mary)
    Abstract: This paper investigates heterogeneity in preferences for forest recreators in Mallorca, Spain. We develop a latent class approach combining discrete and continuous representations of tastes and compare it with the conventional latent class and random parameter logit approaches. We investigate the performance of the discrete-continuous model by comparing welfare estimates and predictive accuracy. The discrete-continuous model outperforms latent class and mixed logit approaches when comparing goodness-of-fit and in- sample site-choice forecasts. We find that the discrete-continuous model for preference heterogeneity reveals variation among individuals' preferences and WTP, and for some policy changes our results reveal striking differences in means and distributions of WTP.
    Keywords: Travel Cost Method, latent class model, random parameter model, recreation demand, forests
    Date: 2009
  2. By: Qin, Pin (College of Environmental Sciences and Engineering, Peking University); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Xu, Jintao (College of Environmental Sciences and Engineering, Peking University)
    Abstract: Various decentralization experiments are currently underway in the Chinese forestry sector. However, a key question often ignored by researchers and policy makers is what farmers really want from reform. This paper addresses this question using a survey-based choice experiment. We investigated farmers’ preferences for various property-rights attributes of a forestland contract. We found that farmers are highly concerned with what types of rights a contract provides. Reducing perceived risks of contract termination and introducing a priority right in the renewal of an old contract significantly increase farmers’ marginal willingness to pay (MWTP) for a forest contract. An extended waiting time for rights to harvest the forest reduces a farmer’s perceived value of a contract. Farmers are also concerned with the tenure length. In one region, the annual willingenss to pay for a 50-year contract is even higher than the annual willingness to pay for 25-year contract.<p>
    Keywords: China; Choice experiment; Forest; MWTP; Property rights
    JEL: D61 Q15 Q23 Q50 Q51
    Date: 2009–06–30
  3. By: Sæther, Erik Magnus (Ragnar Frisch Centre for Economic Research)
    Abstract: What is the effect of increased wages on physician’s working hours and sector choice? This study applies an econometric framework that allows for non-convex budget sets, nonlinear labor supply curves and imperfect markets with institutional constraints. The physicians are assumed to make choices from a finite set of job possibilities, characterized by practice form, hours and wage rates. The individuals may combine their main position with an extra job, opening for a variety of combinations of hours in the respective jobs. I take into account the complicated payment schemes for physicians, taxes and household characteristics when estimating labor supply on Norwegian micro data. The results show a modest response in total hours to a wage increase, but a reallocation of hours in favor of the sector with increased wages.
    Keywords: Physicians; discrete choice; labor supply
    JEL: C25 I10 J22
    Date: 2009–06–22
  4. By: Strand, Jon (Department of Economics)
    Abstract: We present a stated-preference study where values of statistical lives (VSL) are derived both as public and private goods, and we distinguish between three different death causes, heart disease, environmentally related illnesses and traffic accidents. 1000 randomly chosen individuals in Norway were faced a three-part valuation procedure: 1) pairwise comparisons (conjoint analysis), 2) combined contingent-ranking and contingent-valuation of willingness to pay (WTP) for public projects to reduce overall population mortality risk, and 3) WTP for individual treatment reducing own mortality risk from heart disease. Parts 1-2 comprise all three death causes, and indicate public-good VSL in the range 3-6 million USD, with heart disease deaths in the lower part of this range, environmental causes in the upper part, and traffic accidents in-between. Part 2 also permits a splitting up of VSL into motives (selfmotivated and altruistic), and indicates that about 30 % of total public-good WTP is selfmotivated. Part 3 provides a self-motivated (private-good) VSL figure for heart disease in the range 1-1.5 million USD, close to the self-motivated share of VSL from part 2. We find high consistency between values derived, and indications that private- and public-good VSL may differ subtantially, as well as VSL by death cause. Under pairwise comparisons in part 1 we find complete insensitivity of VSL to risk magnitude (or “scope”), in contrast to existing literature. The more complex choices under part 2 by contrast imply considerable scope sensitivity.
    Keywords: Value of statistical lives; public goods; stated preference methods; altruism
    JEL: D64 H41 H42 I18
    Date: 2009–06–29
  5. By: Berster, Peter; Gelhausen, Marc Christopher; Wilken, Dieter
    Abstract: The primary role of international airports is to serve the general public with scheduled and charter services, typically provided by airlines. Of secondary importance is their task to provide direct air transport access to the regional industry and to firms who operate their own fleets. In Düsseldorf (DUS), a major international airport in Germany with about 230 Thousand air transport movements (ATMs) in 2007, about 15 Thousand ATMs belonged to business aviation segment. Due to the complexity of slot allocation procedures and growing runway capacity problems at many international airports, business aviation has a growing problem at these airports to realise the demand for flights. However, neighbouring regional airports could play a complementary role and take over this traffic segment. Therefore, the objective of the paper is to describe and quantify the distribution of the growing business aviation between airports and show potential solutions and further avenues of how to accommodate business aviation at both major and near-by secondary airports. Analysis is supported by means of a new business aviation airport choice model based on a logit approach. This model differs significantly from other airport choice models for regular and tourism traffic in terms of the decision-relevant parameters: Factors such as accessibility of the airport, efficient passenger handling and the length of the runway of secondary airports play an important role, whereas price-related variables are less important to travellers of the business aviation segment. The model enables to develop promising strategies for secondary airports taking over a growing share of the business aviation segment in the case of a neighbouring international airport which suffers from congestion, thereby enhancing the overall level of service in consequence of airport cooperation.
    Keywords: Business aviation on main and satellite airports; airport capacity problems; business aviation development; business aviation airport choice model; air traffic distribution between main and satellite airports
    JEL: C53 C25 R41
    Date: 2009
  6. By: Jeremy T. Fox; Amit Gandhi
    Abstract: We show how to nonparametrically identify the distribution that characterizes heterogeneity among agents in a general class of structural choice models. We introduce an axiom that we term separability and prove that separability of a structural model ensures identification. The main strength of separability is that it makes verifying the identification of nonadditive models a tractable task because it is a condition that is stated directly in terms of the choice behavior of agents in the model. We use separability to prove several new results. We prove the identification of the distribution of random functions and marginal effects in a nonadditive regression model. We also identify the distribution of utility functions in the multinomial choice model. Finally, we extend 2SLS to have random functions in both the first and second stages. This instrumental variables strategy applies equally to multinomial choice models with endogeneity.
    JEL: C14 C25 L0
    Date: 2009–07

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