nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2013‒03‒16
seven papers chosen by
Edoardo Marcucci
Universita' di Roma Tre

  1. A Choice Experiment for the Estimation of the Economic Value of the River Ecosystem: Management Policies for Sustaining NATURA (2000) species and the Coastal Environment By Phoebe Koundouri; Riccardo Scarpa; Mavra Stithou
  2. Generalised empirical likelihood-based kernel density estimation By Vitaliy Oryshchenko; Richard J. Smith
  3. Willingness to Pay for Solid Waste Management Services: A Case Study of Islamabad By Raheel Anjum
  4. A potential solution to problems in ordered choice models involving endogenous ordinal variables for self-reported questions By HASAN, HAMID; Rehman, Attiqur
  5. Identification of discrete choice models for bundles and binary games By Jeremy Fox; Natalia Lazzati
  6. The political economics of social health insurance: the tricky case of individuals’ preferences By Pfarr, Christian; Schmid, Andreas
  7. Linking modal choice to motility: a comprehensive review By Astrid De Witte; Joachim Hollevoet; Frédéric Dobruszkes; Michel Hubert; Cathy Macharis

  1. By: Phoebe Koundouri; Riccardo Scarpa; Mavra Stithou
    Abstract: The valuation method of Choice Experiments (CEs) is often used for the economic valuation of natural areas with several nonmarket features that are either degraded or under-degradation. This method can be used to obtain estimates of Willingness-to-Pay (WTP) for the sustainability of several features of natural ecosystems. In particular, the CE method is a survey-based nonmarket valuation technique which can be used to estimate the total economic value of an environmental good in the form of a stock or a service flow as well as the value of its component attributes. Particularly, the bundle of improvements that have been valued in the Asopos water catchment and presented in this chapter is a mixture of use and non-use values. These include: (a) environmental conditions described in terms of ecological status in all water bodies of the catchment, (b) impact on the local economy in terms of tourism/recreation, demand for local production and cost of living for households and (c) impact on human health described as availability of water with a quality and quantity sufficient for satisfying different local uses. It should be also noted that the survey has been administered in samples of respondents from both the Asopos catchment area (more rural) and the Athens area (more urban), since there is the belief that residents of the Asopos River Basin (RB) are not the only ones who would benefit from the environmental improvements taking place in Asopos area. From a broader policy perspective the goal is to derive estimates of values to inform a cost-effectiveness analysis for the determination of the optimal program of measures as suggested in the content of Article 11 of Water Framework Directive (WFD).
    Date: 2013–03–06
  2. By: Vitaliy Oryshchenko (Department of Economics, University of Oxford); Richard J. Smith (UCL, IFS and University of Cambridge)
    Abstract: If additional information about the distribution of a random variable is available in the form of moment conditions, a weighted kernel density estimate re ecting the extra information can be constructed by replacing the uniform weights with the generalised empirical likelihood probabilities. It is shown that the resultant density estimator provides an improved approximation to the moment constraints. Moreover, a reduction in variance is achieved due to the systematic use of the extra moment information.
    Keywords: weighted kernel density estimation, moment conditions, higher-order expansions, normal mixtures.
    JEL: C14
    Date: 2013–02–12
  3. By: Raheel Anjum (Pakistan Institute of Development Economics (PIDE) Islamabad.)
    Abstract: Solid waste management remains a serious problem in most of the developing world, although it consumes a larger portion of municipal budgets. In the current project, a number of solid waste management studies were conducted for Islamabad city mostly focusing on the generation, collection and disposal of waste. Moreover, a contingent valuation survey approach was applied for the project. A stratified random sampling technique was applied for sample size selection of five hundred respondents. A double bounded dichotomous choice questions followed by an open ended question format was used to elicit willingness to pay and maximum willingness of the respondents. The logistic regression estimation reveals that 65.4 percent of the total respondents are willing to pay, while multiple regression reveals a monthly mean willingness to pay of Rs 289.15 which is greatly affected by age, household income, education and environmental awareness i.e. respondents with higher levels of education and income show higher willingness to pay. These collected data can specifically help in formulating the solid waste management services while in general can add up its role for the improvement of environmental quality.
    Date: 2013
  4. By: HASAN, HAMID; Rehman, Attiqur
    Abstract: Most of the surveys in social sciences generally consist of ordinal variables. Sometimes researchers need to model behaviour of ordinal variables in simultaneous equation system involving many endogenous ordinal variables. This situation leads to a very complex likelihood function which is extremely hard to solve. The solutions suggested in the literature are even harder to understand by applied researchers. The present study suggests a simulation method to avoid this problem altogether by converting ordinal variables into continuous variables and use standard simultaneous regression models. The proposed method involves generating random numbers from continuous probability distributions (uniform and truncated normal distributions) within a discrete probability distribution. This method can be fruitfully be used in ordered logit and probit models. The limitations of this method are also discussed.
    Keywords: Endogenous Ordinal variables, Simultaneous Equation System, Ordered Logit, Ordered Probit.
    JEL: C1 C3 C4
    Date: 2013–03–09
  5. By: Jeremy Fox (Institute for Fiscal Studies and University of Michigan); Natalia Lazzati
    Abstract: We study nonparametric identification of single-agent discrete choice models for bundles and binary games of complete information. We provide conditions under which we can recover both the interaction effects and the distributions of potentially correlated unobservables across goods in single-agent models and across players in games. We establish similarities in identification between these two models. Strengthening our assumptions for games, we provide an equivalence relation between discrete choice models for bundles and binary games that relies on the theory of potential games. Potential games are particularly useful for games of three or more players.
    Date: 2013–02
  6. By: Pfarr, Christian; Schmid, Andreas
    Abstract: Social health insurance systems can be designed with different levels of state involvement and varying degrees of redistribution. In this article we focus on citizens’ preferences regarding the design of their health insurance coverage including the extent of redistribution. Using a microeconomic model we hypothesize that the individual’s preferred options are determined by the relative income position and the relative risk of falling ill. Only individuals who expect to realize a net profit through the implicit redistributive transfers will favour a public insurance coverage over a private one. We test this hypothesis empirically using three dis-tinct approaches. The first two are based on survey questions focusing on the type of coverage and the degree of redistribution respectively. The third is based on a discrete choice experiment thus accounting for trade-offs and budget constraints. The data is from a representative sample of 1.538 German individuals who were surveyed and participated in the DCE in early 2012. We find that the model has to be rejected. There is a wide consensus that redistributive elements should be an integral part of the social health insurance system and could even be extended. However, there are also preferences for health insurance coverage that can be individually optimized.
    Keywords: social health insurance; preferences; discrete choice experiment
    JEL: C93 H23 H51
    Date: 2013–02
  7. By: Astrid De Witte; Joachim Hollevoet; Frédéric Dobruszkes; Michel Hubert; Cathy Macharis
    Abstract: Modal choice is determined by a whole range of factors that are interrelated to a larger or smaller extent. It is often the result of a very compound choice process that can take place consciously or unconsciously and that includes objective as well as subjective determinants. Despite its significance in our daily life, there is no uniform way to define and analyze the concept of modal choice. The aim of this review is to fill this gap by elaborating a common modal choice definition and by providing a comprehensive review on the concept of modal choice through linking it to Kaufmann’s motility concept. By doing so, this review will not only contribute to an improved knowledge on different modal choice determinants and their interdependencies, but can also assist to the understanding and modeling of modal choice decisions. The review can therefore help increasing the effectiveness of policy measures taken by environmental, urban and transport policy makers.
    Keywords: Travel behavior; Modal choice; Determinants; Motility
    Date: 2013

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