nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2011‒03‒05
eight papers chosen by
Philip Yu
Hong Kong University

  1. Factors Affecting Participation of Italian Farmers in Rural Development Policy By Adinolfi, Felice; Capitanio, Fabian; Pascucci, Stefamo; De Magistris, Tiziana
  2. European Preferences for Pork Product and Process Attributes: A Generalized Random Utility Model for Ranked Outcome By Caracciolo, Francesco; Cembalo, Luigi; Cicia, Gianni; Del Giudice, Teresa
  3. Modelling heterogeneity in response behaviour towards a sequence of discrete choice questions: a probabilistic decision process model By McNair, Ben; Heshner, David; Bennett, Jeff
  4. Consumer Attitudes towards Sustainability Attributes on Food Labels By Tait, Peter; Miller, Sini; Abell, Walter; Kaye-Blake, Wiliam; Guenther, Meike; Saunders, Caroline
  5. Is Choice Modelling Really Necessary? Public versus expert values for marine reserves in Western Australia By Rogers, Abbie
  6. Modelling Rural Land Use in New Zealand - A Discrete Choice Perspective By Timar, Levente
  7. The Influence of Rebate Programs on the Demand for Water Heaters The Case of New South Wales By Wasi, Nadi; Carson, Richard
  8. Assessing national values to protect the health of the Great Barrier Reef By Rolfe, John; Windle, Jill

  1. By: Adinolfi, Felice; Capitanio, Fabian; Pascucci, Stefamo; De Magistris, Tiziana
    Abstract: In this paper a (micro)econometric approach is developed by considering the farmer likelihood to participate in different policy programs as linked to the objective of farmer to maximize their welfare. In this way we model farmers participation in policy support scheme by using a new institutional economics approach and conceptualizing the decision to entry as a contractual choice between two rural development types of policy. Different discrete choice modelling approaches are used to analyze the complementarity/ substitutability of different policy programs such as environmental-related measures and farm investment supports policy schemes and the main driving factors behind them. We use an extensive cross-sectional database related to the Italian FADN 2006. Results indicate that social capital and institutional factors should be taken much more into account in order to understand farmers likelihood to entry in policy support schemes. Location and farm(er) socio-economic features are also relevant factors. Moreover complementarity has been found between different policy schemes.
    Keywords: Rural development policy, contract design, discrete choice modelling, Italy, Agricultural and Food Policy, Q12, Q18.,
    Date: 2011–02–10
  2. By: Caracciolo, Francesco; Cembalo, Luigi; Cicia, Gianni; Del Giudice, Teresa
    Abstract: The agriâfood sector and food consumption models have experienced both worldwide and in Europe a process of change that still appears ongoing. The main effects of this change are clearly visible in a whole series of new developments. The most interesting of these appears to be the role played by food product quality as a basis on which to implement modern marketing policies targeting an increasingly segmented market. This obviously makes it necessary for food consumption analysts to shed light on what it means, within todayâs European and world consumption scenarios, to produce quality goods. On this point, in recent years the concept of quality may be said to have undergone rapid evolution. Quality has gone from meaning only intrinsic product attributes, hence synonymous with excellence, to a broader definition full of different meanings. Currently, it is widely recognised that, in modern consumer markets, food product quality is made up by both a set of intrinsic and extrinsic characteristics (Grunert, 2002) and by the way such characteristics are guaranteed and communicated to end consumers (Caswell and Joseph, 2007). As a result, purchase choices are affected not only by elements such as taste and price, but also by product range in the outlet, communication strategies, by the level of food safety, production process characteristics, nutritional aspects, origin and
    Keywords: Agribusiness, Farm Management, Food Consumption/Nutrition/Food Safety, Industrial Organization, Production Economics, Research Methods/ Statistical Methods,
    Date: 2010–10
  3. By: McNair, Ben; Heshner, David; Bennett, Jeff
    Abstract: There is a growing body of evidence in the non-market valuation literature suggesting that responses to a sequence of discrete choice questions tend to violate the assumptions typically made by analysts regarding independence of responses and stability of preferences. Decision processes (or heuristics) such as value learning and strategic misrepresentation have been offered as explanations for these results. While a few studies have tested these heuristics as competing hypotheses, none has investigated the possibility that each explains the response behaviour of a subgroup of the population. In this paper, we make a contribution towards addressing this research gap by presenting a probabilistic decision process model designed to estimate the proportion of respondents employing defined heuristics. We demonstrate the model on binary and multinomial choice data sources and find three distinct types of response behaviour. The results suggest that accounting for heterogeneity in response behaviour may be a better way forward than attempting to identify a single heuristic to explain the behaviour of all respondents.
    Keywords: Choice experiment, decision process, ordering effects, strategic response, willingness to pay, Research Methods/ Statistical Methods, C25, L94, Q51,
    Date: 2011
  4. By: Tait, Peter; Miller, Sini; Abell, Walter; Kaye-Blake, Wiliam; Guenther, Meike; Saunders, Caroline
    Abstract: Concerns about climate change and the general status of the environment have increased expectation that food products have sustainability credentials, and that these can be verified. There are significant and increasing pressures in key export markets for information on Greenhouse gas (GHG) intensity of products throughout its life-cycle. How this information is conveyed to consumers is a key issue. Labelling is a common method of communicating certain product attributes to consumers that may influence their choices. In a choice experiment concerning fruit purchase decisions, this study estimates willingness to pay for sustainability attributes by consumers in Japan and the UK. The role of label presentation format is investigated: text only, text and graphical, and graphical only. Results indicate that sustainability attributes influence consumersâ fruit purchase decisions. Reduction of carbon in fruit production is shown to be the least valued out of sustainability attributes considered. Differences are evident between presentation formats and between countries, with increased nutrient content being the most sensitive to format and country while carbon reduction is the most insensitive and almost always valued the least.
    Keywords: Willingness to pay, Choice experiment, Food labelling, Sustainability, Cross-country comparison, Agricultural and Food Policy, Consumer/Household Economics, Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety, Q18, Q51, Q56,
    Date: 2011
  5. By: Rogers, Abbie
    Abstract: One of the motivations for choice modelling is to provide values that can be used to inform decisionmakers about the non-market costs and benefits of proposed projects or policies. However, the question must be asked as to whether decision-makers consider choice modelling to be a policy relevant tool. There may be more cost-effective and convenient means of providing comparable policy guidance than commissioning a choice modelling study. For example, advice on decision options may be sought from experts, such as scientists. However, expert advice may not accurately reflect the value judgements of the public. The aim of this study is to investigate whether public and expert preferences diverge, using the choice modelling technique. Two case studies are utilised â the Ningaloo Marine Park and the proposed Ngari Capes Marine Park in Western Australia. Evidence of both divergence and convergence between public and expert values is found in different instances, with public awareness factors playing a role in this divide. Where preference divergence appears likely, decision-makers should consider choice modelling as a useful tool to inform policy.
    Keywords: Choice modelling, valuation, experts, public, marine parks, Research Methods/ Statistical Methods,
    Date: 2011
  6. By: Timar, Levente
    Abstract: The economic model I use to describe landownersâ land use decisions is a standard discrete choice random utility maximization model.1 Land is of heterogeneous quality, and suitability for the various uses depends on (multiple dimensions of) quality. Therefore, at any given time, potential benefits derived from each parcel vary by use. As economic conditions change, production technologies advance and the farmer accumulates human capital, the relative desirability of land use alternatives may change on any parcel. When the top-ranked alternative changes due to these forces, the farmer converts the parcel to a different use. The observed pattern of land use therefore represents a snapshot of outcomes from a dynamic process.
    Keywords: Land Economics/Use,
    Date: 2011
  7. By: Wasi, Nadi; Carson, Richard
    Abstract: In the past decade the Australian Federal government and state governments have established a wide range of programs to cut greenhouse gas emissions from all sectors. This paper examines the role of hot water system rebate programs in shifting the existing stock of electric water heaters toward more climate friendly versions using two unique data sets from New South Wales homeowners. The first data set is based on a survey of households who recently purchased a water heater and exploits a natural experiment created by the rebate program to quantify its effects. The other data set is based on a set of stated preference questions asked of households who own an older water heater and will in the reasonably near future face a replacement decision. We find that recent rebate programs significantly increased the share of solar/heat pump systems. For households without access to natural gas, this increased share comes directly from inefficient electric water heaters. For households with access to natural gas, older existing electric water heaters would likely have been replaced with gas water heaters in the absence of the rebate programs. The rebate program appears to be much less effective when water heaters are replaced on an emergency basis. Data from discrete choice experiments was analysed using several flexible choice models. A newly proposed model that combines a latent class approach with a random coefficients approach clearly dominates the other models in terms of statistical fit. Predictions based on this model estimate are reasonably consistent with actual purchase data. Results from it point to considerable heterogeneity with respect to household preferences toward different types of water heaters and with respect to the discount rates they hold.
    Keywords: Climate change mitigation, Energy conservation programs, Natural experiments, Discrete choice experiments, Environmental Economics and Policy, Resource /Energy Economics and Policy,
    Date: 2011
  8. By: Rolfe, John; Windle, Jill
    Abstract: The aim of this study was to estimate the values to protect the health of the Great Barrier Reef (GBR) at the national level and to examine the effects of distance decay on valuation estimates. A split-sample choice-modelling experiment was conducted in six locations: a regional town within the GBR catchment area (Townsville); Brisbane, the state capital approximately 450 km from the southern limit of the GBR; and four other capital cities (Sydney, Melbourne, Adelaide and Perth) ranging from nearly 1,000 km to over 4,000 km from Brisbane. The results suggest that the average WTP across Australian households is $21.68 per household per annum for five years. There was some evidence of distance decay in values. Most decline occurred once outside the home state, and little further decline once away from the east coast. There was no evidence to suggest any difference in patterns of use and non-use values. The values of the potential future users were most influential in determining WTP estimates.
    Keywords: Distance decay, Iconic resources, Choice modelling experiment, Environmental Economics and Policy, Q51, Q57,
    Date: 2011

This nep-dcm issue is ©2011 by Philip Yu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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