nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2012‒05‒22
five papers chosen by
Philip Yu
Hong Kong University

  1. Bayesian Procedures as a Numerical Tool for the Estimation of Dynamic Discrete Choice Models By Peter Haan; Daniel Kemptner; Arne Uhlendorff
  2. Attribute attendance in choice experiments: Exploring issues of scale and attribute farming By Kragt, Marit Ellen
  3. Dynamic Skill Accumulation,Comparative Advantages,Compulsory Schooling and Earnings By Christian Belzil; Jörgen Hansen; Xingfei Liu
  4. How to Deal with Protest Bids and Preference for the Status Quo in Choice Experiments ? By Julie Poirier
  5. Adaptive Estimation in the Nonparametric Random Coefficients Binary Choice Model by Needlet Thresholding By Eric Gautier; Erwann Le Pennec

  1. By: Peter Haan; Daniel Kemptner; Arne Uhlendorff
    Abstract: Abstract Dynamic discrete choice models usually require a general specification of unobserved heterogeneity. In this paper, we apply Bayesian procedures as a numerical tool for the estimation of a female labor supply model based on a sample size which is typical for common household panels. We provide two important results for the practitioner: First, for a specification with a multivariate normal distribution for the unobserved heterogeneity, the Bayesian MCMC estimator yields almost identical results as a classical Maximum Simulated Likelihood (MSL) estimator. Second, we show that when imposing distributional assumptions which are consistent with economic theory, e.g. log-normally distributed consumption preferences, the Bayesian method performs well and provides reasonable estimates, while the MSL estimator does not converge. These results indicate that Bayesian procedures can be a beneficial tool for the estimation of dynamic discrete choice models.
    Keywords: Bayesian Estimation, Dynamic Discrete Choice Models, Intertemporal Labor Supply Behavior
    JEL: C11 C25 J22
    Date: 2012
  2. By: Kragt, Marit Ellen
    Abstract: An increasing number of choice experiment studies has shown that not all respondents consider all attributes when choosing their preferred alternative in the presented choice sets. Not accounting for this so-called ‘attribute non-attendance’ will lead to bias parameter estimates, and can hence increase or reduce estimates of willingness to pay. In this study, three aspects of attribute non-attendance are investigated. First, scale heterogeneity models are specified to test whether attribute attendance affects the variance of the error term. Second, the concordance between stated non-attendance and inferred non-attendance is assessed by comparing answers to supplementary questions with results from equality constrained latent class models. Finally the impacts of varying attribute descriptions or attribute levels on attendance is analysed. Results show that model fit is significantly improved when attribute non-attendance is taken into account, that but welfare estimates are not significantly different. The scale heterogeneity models reveal significant individual heterogeneity in scale, which decreases when incorporating ANA in the model specification. There is little overlap between stated and inferred non-attendance. Finally, describing a rare species attribute in terms of “number of species lost” attracts more attention to that attribute compared to “number of species present”, and that using a higher price vector may reduce attendance to the cost attribute.
    Keywords: Attribute Attendance, Choice Experiments, Framing Effects, Mixed Logit Models, Latent Class Models, Scale Heterogeneity, Environmental Economics and Policy, Institutional and Behavioral Economics, Q51, Q57,
    Date: 2012–05–02
  3. By: Christian Belzil (CREST); Jörgen Hansen (Concordia University, CIRANO, CIREQ and IZA); Xingfei Liu (Concordia University)
    Abstract: We show that a calibrated dynamic skill accumulation model allowing for comparative advantages, can explain the weak (or negative) effects of schooling on productivity that have been recently reported (i) in the micro literature on compulsory schooling, ii) in the micro literature on estimating the distribution of ex-post returns to schooling, and (iii) in the macro literature on education and growth. The fraction of the population more efficient at producing skills in the market than in school is a pivotal quantity that determines the sign (and magnitude) of different parameters of interest. Our model reveals an interesting paradox; as low-skill jobs become more skill-enhancing (ceteris paribus), IV estimates of compulsory schooling become increasingly negative, and ex-post returns to schooling (inferred from a Roy model specification of the earnings equation) become negative for an increasing fraction of the population. This arises even if each possible input to skill production has a strictly positive effect. Finally, our model provides a foundation for the weak (or negative) effect education on growth measured in the empirical literature
    Keywords: Compulsory Schooling Reforms, Dynamic Skill Accumulation, Comparative Advantages, Returns to schooling, Education and Growth,Dynamic Discrete Choice, Dynamic Programming
    JEL: I2 J1 J3
    Date: 2012–01
  4. By: Julie Poirier (CREST)
    Abstract: This paper deals with the protest bids issue in choice experiments. In the context of the Water Framework Directive, we examined local residents’ preferences for water quality improvements at a specific river basin in France. We used the choice experiment method with site-specific attributes referring to the four sites that compose our basin. We first estimated a random parameters logit model in order to take into account heterogeneity of preferences. We found positive willingness-to-pay for improvements in water quality. Moreover we observed that a significant proportion of respondents always chose the status quo scenario (which referred to the current management regime and was associated with a zero price) irrespective of the choice set she was presented. Status quo responses are considered as being zero bids and may be categorized into two types: true zero bids, where the respondent really places a zero value on the good, and protest bids, where the respondent states a zero willingness-topay even though her true value for the good is positive. We excluded protest bids from the analysis and re-estimated our random parameters logit model. Results showed that protest bids do affect the outcome. In order to take into account the existence of the two types of zero bids when estimating willingness-to-pay, we then proposed a cross-nested logit model. Implicit prices obtained from this model estimation are larger than those obtained from the random parameters logit model estimation. As a result, the cross-nested logit model allows taking into consideration the peculiarity of protest behaviors
    Keywords: Choice experiments; Cross-nested logit model; Protest bids; Water Framework Directive;Water quality
    Date: 2012–01
  5. By: Eric Gautier (CREST); Erwann Le Pennec (INRIA)
    Keywords: discrete-choice models, random coefficients, inverse problems, minimax rate optimality, adaptation, needlets, data-driven thresholding
    Date: 2011–06

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