nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2013‒05‒11
nine papers chosen by
Edoardo Marcucci
Universita' di Roma Tre

  1. The Value of Climate Amenities: Evidence from US Migration Decisions By Sinha, Paramita; Cropper, Maureen L.
  2. Ancillary experiments: Opportunities and challenges By Baldwin, Kate; Bhavnani, Rikhil R.
  3. The Microeconomics of Domestic Violence: empiricall evidence from Medellín By Jorge Barrientos Marín; Daniel Salinas; Carlos Molina
  4. Noisy retrievers and the four-fold reaction to rare events By Davide Marchiori; Sibilla Di Guida; Ido Erev
  5. Tests for Price Endogeneity in Differentiated Product Models By Kyoo il Kim; Amil Petrin
  6. Exploration of dynamic fixed effects logit models from a traditional angle By Yoshitsugu Kitazawa
  7. A Stata package for the application of semiparametric estimators of dose-response functions By BIA Michela; FLORES Carlos A.; FLORES-LAGUNES Alfonso; MATTEI Alessandra
  8. Pure Ethnic Gaps in Educational Attainment and School to Work Transitions. When Do They Arise? By S. BAERT; B. COCKX
  9. Determinants of Adoption and Spatial Diversity of Wheat Varieties on Household Farms in Turkey By Negassa, Asfaw; Hellin, Jonathan; Shiferaw, Bekele A.

  1. By: Sinha, Paramita; Cropper, Maureen L. (Resources for the Future)
    Abstract: We value climate amenities by estimating a discrete location choice model for households that changed metropolitan statistical areas (MSAs) between 1995 and 2000. The utility of each MSA depends on location-specific amenities, earnings opportunities, housing costs, and the cost of moving to the MSA from the household’s 1995 location. We use the estimated trade-off between wages and climate amenities to value changes in mean winter and summer temperatures. At median temperatures for 1970 to 2000, a 1°F increase in winter temperature is worth less than a 1° decrease in summer temperature; however, the reverse is true at winter temperatures below 25°F. These results imply an average welfare loss of 2.7 percent of household income in 2020 to 2050 under the B1 (climate-friendly) scenario from the special report on emissions scenarios (Intergovernmental Panel on Climate Change 2000), although some cities in the Northeast and Midwest benefit. Under the A2 (more extreme) scenario, households in 25 of 26 cities suffer an average welfare loss equal to 5 percent of income.
    Keywords: climate amenities, discrete choice models, migration, welfare impacts of temperature changes
    JEL: Q5 Q51
    Date: 2013–01–03
  2. By: Baldwin, Kate; Bhavnani, Rikhil R.
    Abstract: .Ancillary experiments. are a new technique whereby researchers use a completed experiment conducted by others to recover causal estimates of a randomized intervention on new outcomes. The method requires pairing new outcome data with randomized treatment
    Keywords: experimental methods, government performance, ancillary experiments, downstream experiments, causal inference, research design
    Date: 2013
  3. By: Jorge Barrientos Marín; Daniel Salinas; Carlos Molina (Universidad de Antioquia)
    Abstract: in this paper we are interested in investigating the determinants of domestic violence. For this goal, we consider that many intra-household choices (on good consumption or choices among a set of alternatives) taken by single individuals produces negative externalities and conflict, which may generates events of violence. From theoretical point of view, this paper shows us how the choices of the so-called assailant, have negative impacts on victim’s welfare or utility. In addition, by performing discrete choice models, we show that socioeconomic factors like alcohol consumption and leisure (among others) increases the probability of events of violence.
    Keywords: domestic violence, choices, externalities, conflict, victim, assailant, discrete choice model, marginal effect
    Date: 2013
  4. By: Davide Marchiori (Department of Management, Università Ca' Foscari Venezia); Sibilla Di Guida (SBS-EM, ECARES, Universite Libre de Bruxelles); Ido Erev (Faculty of Industrial Engineering and Management, Technion)
    Abstract: Previous research documents two pairs of inconsistent reactions to rare events: 1) Studies of probability judgment reveal conservatism which implies overestimation of rare events, and overconfidence which implies underestimation of rare events. 2) Studies of choice behavior reveal overweighting of rare events in one-shot tasks, and the opposite bias in decisions from experience. The current analysis and experimental results demonstrate that the coexistence and relative importance of the four biases can be captured with simple models that share the assumption that judgments and decisions are made based on the information conveyed by small and noisy samples of past experiences.
    Keywords: Black swan; prospect theory; experience-description gap; case-based decision theory; overgeneralization
    JEL: C79 C91 D81
    Date: 2013–04
  5. By: Kyoo il Kim; Amil Petrin
    Abstract: We develop simple tests for endogenous prices arising from omitted demand factors in discrete choice models. Our approach only requires one to locate testing proxies that have some correlation with the omitted factors when prices are endogenous. We use the difference between prices and their predicted values given observed demand and supply factors. If prices are exogenous, these proxies should not explain demand given prices and other explanatory variables. We reject exogeneity if these proxies enter significantly in utility as additional explanatory variables. The tests are easy to implement as we show with several Monte Carlos and discuss for three recent demand applications.
    JEL: C3 L0
    Date: 2013–05
  6. By: Yoshitsugu Kitazawa (Faculty of Economics, Kyushu Sangyo University)
    Abstract: This paper proposes the transformations for the dynamic fixed effects logit models. Firstly, the transformations construct the valid moment conditions (including the stationarity moment conditions) for the case without explanatory variable. Combining portions of the valid moment conditions gives just the first-order condition of the conditional MLE proposed by Chamberlain (1985). Next, the valid moment conditions are constructed by using the transformations for the case with strictly exogenous continuous explanatory variables, when the number of time periods is greater than or equal to four. This implies that for the dynamic fixed effects logit model with strictly exogenous continuous explanatory variables, the estimators can be constructed which are consistent and asymptotically normal and whose convergence rates equal the inverse of the square root of the cross-sectional sample size. In addition, the small sample properties of the GMM estimators using these moment conditions are investigated by using Monte Carlo experiments.
    Keywords: dynamic fixed effects logit models; moment conditions; stationarity; strictly exogenous continuous explanatory variables; root-N consistent estimators; Monte Carlo experiments
    JEL: C23 C25
    Date: 2013–04
  7. By: BIA Michela; FLORES Carlos A.; FLORES-LAGUNES Alfonso; MATTEI Alessandra
    Abstract: In many observational studies the treatment may not be binary or categorical, but rather continuous in nature, so focus is on estimating a continuous dose-response function. In this paper we propose a set of Stata programs to semiparametrically estimate the dose-response function of a continuous treatment, under the key assumption that adjusting for pre-treatment variables removes all biases (uncounfoundedness). We focus on kernel methods and penalized spline models, and use generalized propensity score methods under continuous treatment regimes for covariate adjustment. Several alternative parametric assumptions on the functional form of the generalized propensity score are implemented in our Stata programs, which also allow users to impose a common support condition and evaluate the balancing of the covariates using various approaches. We illustrate our routines by estimating the effect of the prize amount on subsequent labor earnings for Massachusetts lottery winners, using a data set collected by Imbens et al. (2001).
    Keywords: dose-response function; generalized propensity score; kernel estimator; penalized spline estimator; weak unconfoundedness
    JEL: C13 J31 J70
    Date: 2013–04
  8. By: S. BAERT; B. COCKX
    Abstract: This article decomposes the observed gaps in educational attainment and school-to-work transitions between grandchildren of natives and immigrants in Belgium into (i) differences in observed family endowments and (ii) a residual “pure ethnic gap”. It innovates by explicitly taking delays in educational attainment into account, by identifying the moments at which the pure ethnic gaps arise, by disentangling the decision to continue schooling at the end of a school year from the achievement within a particular grade, and by integrating the language spoken at home among observed family endowments. The pure ethnic gap in educational attainment is found to be small if delays are neglected, but substantial if not and for school-to-work transitions. It is shown that morethan 20% of the pure ethnic gap in graduating from secondary school without delay originates in tenth grade. Language usage explains only part of the gap in school-to-work transitions for low educated.
    Keywords: dynamic discrete choice, dynamic selection bias, educational attainment, school-to-work transitions, ethnic minorities, discrimination.
    JEL: C35 J15 J70
    Date: 2013–02
  9. By: Negassa, Asfaw; Hellin, Jonathan; Shiferaw, Bekele A.
    Abstract: The Heckman two-stage estimation procedure was used to investigate factors influencing the adoption of modern and/or landrace wheat varieties and spatial diversity of wheat varieties in Turkey. In the first stage, the multinomial logit choice model (MNLM) was used to determine factors influencing farmers’ adoption of modern varieties (MVs) and/or landrace varieties (LVs) of wheat. Conditional on the choice of a given wheat variety or combination of MVs and LVs, a Tobit regression model was used to assess the determinants of on-farm spatial diversity of wheat varieties in the second stage. Our empirical approach allows for the analysis of partial adoption decision of wheat varieties and controls for self-selection problem in analyzing the determinants of spatial diversity of wheat varieties. The empirical model was conceptualized based on random utility model(RUM).The analysis was based on cross-sectional survey data collected on 486 sample households in six provinces of Turkey. Results showed that household size, the number of owned cattle, the number of buildings on farm, farm size, farm land fragmentation, the percentage of irrigable farm plots and regional variations are the important factors in determining the farmers’ first-stage choice of wheat variety types. The selfselection problem was significant only in one of the three cases for the landrace wheat varieties. In the second stage, the farm size and land fragmentation were found to be the key variables influencing the level of on-farm spatial diversity of wheat varieties. The results showed that considerable spatial wheat genetic diversity was maintained on-farm at the household level, mainly through the simultaneous adoption of modern and traditional wheat varieties. Growing a combination of modern and landrace wheat varieties was observed to yield significantly higher level of spatial diversity of wheat genetic resources as compared to growing modern varieties alone or landrace varieties alone. This result suggests that the modern and landrace wheat varieties can coexist and could still support more on-farm spatial diversity of wheat genetic resources. This finding has significant implications for future extension, research and policy efforts for on-farm conservation and utilization of wheat genetic resources in Turkey. There is a need for the government and private sector research and extension efforts to support farmers’ use of both modern and landrace varieties, for example, in terms of seed supply, provision of extension and credit services and marketing support instead of just giving undue priority to popularization and adoption of modern varieties alone.
    Keywords: Agricultural and Food Policy, Consumer/Household Economics,
    Date: 2012–03

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