nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2010‒11‒13
thirteen papers chosen by
Philip Yu
Hong Kong University

  1. Heterogenous Preferences for Community Recyling Programs By Kipperberg, Gorm; Larson, Douglas M
  2. Restricted versus unrestricted choice in labelled choice experiments: exploring the tradeoffs of expanding choice dimensions By Windle, Jill; Rolfe, John
  3. The Effects of a Provision Rule in Choice Modelling By Mazur, Kasia; Bennett, Jeff
  4. Testing for geographic scope and scale effects with choice modelling: Application to the Great Barrier Reef By Rolfe, John; Windle, Jill
  5. Valuing environmental improvements in the Great Barrier Reef: Ecological and preference heterogeneity in local area case studies By Rolfe, John; Windle, Jill
  6. Inducing Strategic Bias: and its implications for Choice Modelling design By Burton, Michael
  7. Do values for protecting iconic assets vary across populations? A Great Barrier Reef case study By Rolfe, John; Windle, Jill
  8. Effects of alternative elicitation formats in discrete choice experiments By Scheufele, Gabriela; Bennett, Jeff
  9. Testing construct validity of verbal versus numerical measures of preference uncertainty in contingent valuation By Akter, Sonia; Bennett, Jeff
  10. Valuing protection of the Great Barrier Reef with choice modelling by management policy options By Rolfe, John; Windle, Jill
  11. Using Choice Modelling to assess the willingness to pay of Queensland households to reduce greenhouse emissions By Ivanova, Galina; Rolfe, John; Tucker, Gail
  12. The Value of Tropical Waterways and Wetlands: does an increase in knowledge change community preferences By McCartney, Abbie; Cleland, Jonelle; Burton, Michael
  13. Measuring Multimodal Transport Level of Service By Kanafani, Adib; Wang, Rui

  1. By: Kipperberg, Gorm (University of Stavanger); Larson, Douglas M (University of California, Davis)
    Abstract: .
    Keywords: Stated preferences; mixed logit; willingness to pay; recycling programs; environmental policy
    JEL: C25 D12 H44 Q51 Q53
    Date: 2010–11–01
  2. By: Windle, Jill; Rolfe, John
    Abstract: The main objective of the study outlined in this paper was to examine how the inclusion of an additional labelled alternative, to provide respondents with more choice in a stated preference survey, impacted on choice complexity. The valuation context was to elicit preferences for improvements in the future condition of the Great Barrier Reef, Australia. A split sample experiment was implemented where one survey included four labelled alternatives: a status quo option and three specific policy management options (restricted choice). The other survey provided respondents with an unrestricted choice set by including a fifth alternative choice, labelled as âa combination of management optionsâ. While the additional option improved opportunities to find an attractive choice profile, adding an extra alternative increased the complexity of the survey. The tradeoff between choice flexibility and complexity is examined in terms of changes in respondentsâ choice behaviour and the performance of the different models. The results provide some evidence that adding a combination policy alternative did change the ways that respondents viewed tradeoffs, but that choice behaviour and subsequent value estimates were consistent across the two survey formats.
    Keywords: Choice complexity, choice modelling experiments, labelled alternatives, policy management options, multiple alternatives, Resource /Energy Economics and Policy,
    Date: 2010–03
  3. By: Mazur, Kasia; Bennett, Jeff
    Abstract: This research report investigates the effects of including a provision rule in choice modelling non-market valuation studies. Split samples with and without a provision rule were used to test for differences in household willingness-to-pay for improvements in environmental quality in the Hawkesbury-Nepean catchment. Local/rural and distant/urban sub-samples of residents were selected. The results of the study show that the inclusion of a provision rule had an effect on preferences in the distant/urban communities; however, the impact of a provision rule in the local/rural community sub-samples was negligible.
    Keywords: Choice modelling, incentive comparability, provision rule, non-market valuation, environment, Environmental Economics and Policy, Research Methods/ Statistical Methods,
    Date: 2010–02
  4. By: Rolfe, John; Windle, Jill
    Abstract: The focus of this report is to report choice modelling experiments that have tested the consistency of values across differently scoped dimensions of an environmental asset. The case study involved the Great Barrier Reef (GBR) in Australia, where a key policy question is to identify if protection values for one part of the reef can be transferred to different sections and scaled from local case studies to the whole reef area without adjustment. The study involved 12 split-samples in three CM experiments to assess values for the whole GBR, a regional section of the GBR and a local reef area while controlling for variations across populations, the scope of the choice tasks, and survey formats. The results demonstrate that issues of geographic scope and scale remain challenging in CM experiments. Contrary to expectations, the proportional values for different regions of the GBR remained consistent when geographic scope and scale increased, while absolute values declined. This was despite substantial efforts in designing and presenting the surveys to define the amenity of interest to respondents. The results indicate that it is difficult to identify single unit values for an environmental amenity that can be easily transferred and extrapolated across geographic regions and scales. However, there may be good theoretical reasons why marginal values for specific areas of interest in the GBR have much higher protection values, which then decline as larger and more general areas are considered.
    Keywords: Resource /Energy Economics and Policy,
    Date: 2010–09
  5. By: Rolfe, John; Windle, Jill
    Abstract: The focus of this report is to test if protection values at a particular GBR site may be easily transferred to other case studies of interest in the region. The research involved valuing three local case studies in the GBR and testing how values were consistent across site and population characteristics. The sites were chosen to reflect substantial heterogeneity in extent, ecological composition and condition, while values were assessed for both local and distant populations. The results are encouraging, indicating that although significant heterogeneity was identified with the mixed logit models, values were robust to various site and population differences. No significant difference in protection values between the three local case studies could be identified, and there was no significant difference in values between the local population and the Brisbane population. However, some evidence for distance effects was identified for the Brisbane population, with closer sites valued more highly. As well, potential losses were valued more highly (in absolute terms) than potential gains. The implication of these results is that protection values are likely to be higher for closer reef areas with risks of losses than these with opportunities for improvements.
    Keywords: Choice modelling, benefit transfer, population effects, Great Barrier Reef, willingness-to-pay, willingness-to-accept, Resource /Energy Economics and Policy,
    Date: 2010–07
  6. By: Burton, Michael
    Abstract: It has been suggested that the nature of the task within a multi-attribute multi-alternative choice experiment may be sufficiently complex to make it difficult for individuals to develop response strategies to strategically bias their answers. This experiment tested that hypothesis by setting experimental conditions that provide incentives for strategic bias. By changing design parameters one can investigate whether the strategic bias can be reduced. The answer is effectively no: under most circumstances, respondents could find a strategy that achieved significant bias in inferred preferences. The circumstances where this did not occur (involving ranking alternatives, rather than selecting a single preferred alternative) the inferred preferences reflected neither the intended bias, nor their original preferences, making the answers useless to both respondent and researcher.
    Keywords: Strategic bias, choice modeling, complexity, Resource /Energy Economics and Policy, Q51, C91,
    Date: 2010
  7. By: Rolfe, John; Windle, Jill
    Abstract: A number of studies have examined the effects of distance decay and the influence it might have on both use and non-use values. However, the relationship between environmental values and distance effects is less clear cut when iconic or special assets are involved. In this report, the effects of distance decay on protection values of the Great Barrier Reef in Australia are explored using two split sample choice experiments. The results suggest that the Townsville (local) population had larger use values than the Brisbane (distant) population. However, for iconic resources, where perceptions of responsibility, substitutes and information are reasonably consistent across population groups, non-use values remain constant across spatially different population groups.
    Keywords: Choice modelling experiment, distance decay, population effects, iconic assets, Great Barrier Reef, use values, non-use values, Resource /Energy Economics and Policy,
    Date: 2010–05
  8. By: Scheufele, Gabriela; Bennett, Jeff
    Abstract: An elicitation format prevalently applied in discrete choice experiments (DCEs) offers each respondent a sequence of choice tasks. Each choice task contains more than two choice options. Empirical evidence shows, however, that repeated choice tasks influence choice behaviour through institutional learning, fatigue, value learning and strategic response. The study reported in this paper uses a split sample approach. This approach was based on field surveys using a single binary elicitation format. To expand the research on effects of sequential binary DCE formats, a majority vote baseline was used. We present evidence for effects caused by institutional learning, and by either strategic behaviour or value learning, after respondents answered repeated choice questions. However, we did not find any indications for strategic behaviour in respondents caused by their awareness of having multiple choices. The decision to use a sequential or a single elicitation format may therefore imply a trade-off between decreased choice accuracy and potentially increased strategic behaviour in respondents. This trade-off is due to an incentive incompatible mechanism. Further research is needed to explore strategic behaviour induced by incentive incompatible elicitation formats, using alternative approaches that are not compromised by a confounded baseline, that facilitate the differentiation between value learning and strategic behaviour, and that allow the use of less restrictive model specifications. Such research should also investigate the effects of varying incentives induced by the order in which choice questions are presented to respondents.
    Keywords: discrete choice experiments, split sample approach, elicitation format, incentive compatibility, strategic behaviour, learning effects, panel mixed logit models, Environmental Economics and Policy, Research Methods/ Statistical Methods,
    Date: 2010–03
  9. By: Akter, Sonia; Bennett, Jeff
    Abstract: The numerical certainty scale (NCS) and polychotomous choice (PC) methods are two widely used techniques for measuring preference uncertainty in contingent valuation (CV) studies. The NCS follows a numerical scale and the PC is based on a verbal scale. This report presents results of two experiments that use these preference uncertainty measurement techniques. The first experiment was designed to compare and contrast the uncertainty scores obtained from the NCS and the PC method. The second experiment was conducted to test a preference uncertainty measurement scale that combines verbal expressions with numerical and graphical interpretations: a composite certainty scale (CCS). The construct validity of the certainty scores obtained from these three techniques was tested by estimating three separate ordered probit regression models. The results of the study can be summarised in three key findings. First, the PC method generates a higher proportion of âyesâ responses than the conventional dichotomous choice elicitation format. Second, the CCS method generates a significantly higher proportion of certain responses than the NCS and the PC methods. Finally, the NCS method performs poorly in terms of construct validity. Overall, the verbal measures perform better than the numerical measure. The CCS is a promising method to measure preference uncertainty in CV studies. To better understand its strengths and weaknesses however, further empirical applications are needed.
    Keywords: preference uncertainty, contingent valuation, numerical certainty scale, polychotomous choice method, composite certainty scale, climate change, Australia., Environmental Economics and Policy, Research Methods/ Statistical Methods, Q51, Q54,
    Date: 2010–01
  10. By: Rolfe, John; Windle, Jill
    Abstract: In this paper the results of a choice modelling experiment to value increased protection of the Great Barrier Reef in Australia is reported. There are very few previous studies that identify protection values for the Great Barrier Reef, making it difficult to evaluate whether the community benefits from future additional protection measures are larger than the costs involved. The valuation experiment that has been conducted is novel in two important ways. First, different management policies to increase protection have been included as labels in the choice experiment to test if the mechanisms to achieve improvements are important to respondents. Second, the level of certainty associated with predicted reef health has been included as an attribute in the choice profiles, helping to distinguish between outcomes of different management policies. The results show that protection values vary with the policy scope of the improvements being considered. Values are sensitive to whether protection will be generated by improving water quality entering the reef, increasing conservation zones or reducing greenhouse gas emissions, and the level of certainty of outcomes. The average household willingness to pay for five years for each additional 1% of protection is approximately $26.37 when the broad management options to generate improvements were included in the choice sets. These results can be extrapolated to a total value held by Queensland households of $132.8M to $171.5M per 1% improvement, depending on the assumptions used about the discount rate.
    Keywords: Resource /Energy Economics and Policy,
    Date: 2010
  11. By: Ivanova, Galina; Rolfe, John; Tucker, Gail
    Abstract: This paper presents the results of a choice modeling survey of households in Queensland to assess values for reductions in national greenhouse emissions by 2020. The study is novel in two main ways. First, labeled alternatives were used to assess whether the types of broad management options for reducing net emissions (green power, alternative technologies or carbon capture) are significant in understanding preferences for reducing emissions. Second, the importance of the level and type of uncertainty involved in reductions is tested. They include (1) the uncertainty of achieving emissions reduction and (2) the uncertainty of international participation as the percentage of total global emissions covered by international agreements. The results of this survey identified how choice responses vary when the level of uncertainty associated with emissions reduction options are included within choice alternatives.
    Keywords: Environmental Economics and Policy,
    Date: 2010–05
  12. By: McCartney, Abbie; Cleland, Jonelle; Burton, Michael
    Abstract: This working paper utilises the choice modelling technique to investigate how information and understanding influences preferences of the general public for conservation of natural environments, specifically the tropical waterways and wetlands of the Kimberley region in Western Australia. The paper forms part of a larger study investigating preference divergence for environmental systems between experts and non-experts. By priming the public with more information about complex environmental problems, one might expect them to form preferences similar to that of experts. A preliminary analysis of public low and high information samples finds that, when birds and plants are the focus of species conservation with respect to the tropical waterways, increased information does not significantly impact preferences. However, when fish species conservation is considered significant differences are found. In this instance individuals appear to have reacted favourably to the additional information, recognising that rare species require more protection than widespread iconic species by placing higher values on their conservation. Generally speaking, respondents preferred high levels of conservation improvements over all attributes considered, rather than lower incremental improvements. Results should be interpreted with care as further analysis is required, including investigation of the alternative specific constant and inclusion of individual characteristics to explain sample heterogeneity.
    Keywords: Resource /Energy Economics and Policy,
    Date: 2010–05
  13. By: Kanafani, Adib; Wang, Rui
    Abstract: One of the challenges facing intermodal integration is that the planning framework needed for it lacks appropriate measures of level of service that cut across the modes involved and the connections between them. In this study we develop a framework and a set of metrics of level of service in a multimodal context. We propose a conceptual framework in which we identify the various attributes of level of service and the method of their integration. These measures of performance are defined from two perspectives: the user’s perspective (the demand side) and the provider’s perspective (the supply side). An analytical framework is then proposed in which a working definition of a “multi-modal corridor†is adopted and a methodology for defining and combining measures of performance for such a corridor is developed. The methodology is defined in the context of evaluation for the purpose of choosing among alternative corridors. The approach is grounded in utility theory and quantitatively these measures of performance are defined as indirect utility functions of the type used in choice models. In combining the measures of performance for different elements of a multi-modal corridor, the methodology recognizes that some are additive, either simply or with appropriate weights, while others are not additive at all and exhibit phenomena such as weakest link, or maximal effort. Safety is a good example of this. The basic proposition is that many level of service metrics are non-additive and their combination for a multimodal systems requires specific models that reflect the way the attributes impact users of different modes and during different segments of a multimodal journey. This study concludes by recommending some research directions to develop the models needed for the integration of level of service measures for multi-modal corridors and for their inclusion in indirect utility function.
    Date: 2010–08–01

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