nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2013‒09‒28
eight papers chosen by
Edoardo Marcucci
Universita' di Roma Tre

  1. Analysis of Consumer Preferences and Willingness-To-Pay for Organic Food Products in Germany By Illichmann, Rebecca; Abdulai, Awudu
  2. Consistently estimating link speed using sparse GPS data with measured errors By Fadaei Oshyani , Masoud; Sundberg , Marcus; Karlström , Anders
  3. College Admissions in China : A Mechanism Design Perspective By Min Zhu
  4. Developing countries in need: Which characteristics appeal most to people when donating money? By Paul Hansen; Nicole Kergozou; Stephen Knowles; Paul Thorsnes
  5. Health Care Facility Choice and User Fee Abolition: Regression Discontinuity in a Multinomial Choice Setting By Steven F. Koch; Jeffrey S. Racine
  6. Can Property Values Capture Changes in Environmental Health Risks? Evidence from a Stated Preference Study in Italy and the UK By Dennis Guignet; Anna Alberini
  7. What are we learning from business training and entrepreneurship evaluations around the developing world? By McKenzie, David J.; Woodruff, Christopher
  8. Hospital Choices, Hospital Prices and Financial Incentives to Physicians By Kate Ho; Ariel Pakes

  1. By: Illichmann, Rebecca; Abdulai, Awudu
    Abstract: This study employs a choice experiment approach to investigate consumers’ preferences and WTP for organic food products. We use mixed logit models to examine preference heterogeneity. The results revealed significant heterogeneity in preferences for organic apples, milk, and beef product attributes among consumers. The willingness-to-pay (WTP) results obtained from mixed logit indicate gender-specific differences for the examined products of this study. Female respondents have a higher WTP for apple attributes, while higher WTP values for milk and beef attributes are observed for male respondents.
    Keywords: Organic farming, choice experiment, preference heterogeneity, mixed logit, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,
    Date: 2013
  2. By: Fadaei Oshyani , Masoud (KTH); Sundberg , Marcus (KTH); Karlström , Anders (KTH)
    Abstract: Data sources using new technology such as the Geographical Positioning System are increasingly available. In many different applications, it is important to predict the average speed on all the links in a network. The purpose of this study is to estimate the link speed in a network using sparse GPS data set. Average speed is consistently estimated using Indirect Inference approach. In the end, the Monte Carlo evidence is provided to show that the results are consistent with parameter estimates.
    Keywords: Travel time; Sparse GPS data; Indirect inference; Map matching; Route choice.
    JEL: R40
    Date: 2013–09–16
  3. By: Min Zhu (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: This paper justifies the evolution of the college admissions system in China from a mechanism design perspective. The sequential choice algorithm and the parallel choice algorithm used in the context of China's college admissions system are formulated as the well-studied Boston mechanism and the Simple Serial Dictatorship mechanism. We review both theoretical and experimental mechanism design literature in similar assignment problems. Studies show that the Boston mechanism does not eliminate justified envy, is not strategy-proof and is not Pareto-efficient. The Simple Serial Dictatorship mechanism eliminates justified envy, is strategy-proof and is Pareto-efficient, thus outperforming the Boston mechanism in all three criteria. This result provides justification for the transition in recent years from the sequential choice algorithm to the parallel choice algorithm in China's college admissions practices.
    Keywords: college admissions in China, mechanism design, experiment
    Date: 2013–09–11
  4. By: Paul Hansen (Department of Economics, University of Otago, New Zealand); Nicole Kergozou (Reserve Bank of New Zealand); Stephen Knowles (Department of Economics, University of Otago, New Zealand); Paul Thorsnes (Department of Economics, University of Otago, New Zealand)
    Abstract: A discrete choice experiment was conducted to discover the relative importance of five characteristics of developing countries, as suggested by the literature, considered by people when choosing countries to donate money to. The experiment was administered via an online survey involving almost 700 student participants (potential donors) from a New Zealand university. The most important recipient-country characteristic for participants on average is hunger and malnutrition (a weight of 0.29), followed by child mortality (0.24), quality of infrastructure (0.21), income per capita (0.18), and, least importantly, ties to New Zealand (0.09). A cluster analysis of participants' individual `part-worth utilities' representing the relative importance of the country characteristics reveals they are not strongly correlated with participants' demographic characteristics. Our findings overall indicate that to maximise the donations they receive, non-governmental aid organisations are better to focus their marketing efforts on emphasising country characteristics associated with hunger, malnutrition and child mortality than other things.
    Keywords: foreign aid, charitable giving, discrete choice experiment, conjoint analysis, PAPRIKA method
    JEL: A13 C91 D64 O1
    Date: 2013–09
  5. By: Steven F. Koch; Jeffrey S. Racine
    Abstract: We apply parametric and nonparametric regression discontinuity methodology within a multinomial choice setting to examine the impact of public health care user fee abolition on health facility choice using data from South Africa. The nonparametric model is found to outperform the parametric model both in- and out-of-sample, while also delivering more plausible estimates of the impact of user fee abolition (i.e. the 'treatment effect'). In the parametric framework, treatment effects were relatively constant - around 7% - and that increase was drawn equally from both home care and private care groups. On the other hand, in the nonparametric framework treatment effects were largest for the least well-off (also around 7%) but fell for the most well-off. More plausibly, that increase was drawn primarily from the home care group, suggesting that the policy favoured those least well-off as more of these children received at least some minimum level of professional health care after the policy was implemented. Regarding the most well-off, despite having access to free public health care, children were still far more likely to receive health care at private facilities than at public facilities, which is also more plausible in South Africa's two-tier health sector.
    Date: 2013–09
  6. By: Dennis Guignet (National Center for Environmental Economics US Environmental Protection Agency); Anna Alberini (Department of Agricultural and Resource Economics University of Maryland, and Fondazione Eni Enrico Mattei, Venice)
    Abstract: Hedonic property value models are often used to place a value on localized amenities and disamenities. In practice, however, results may be affected by (i) omitted variable bias and (ii) whether homebuyers and sellers are aware of, and respond to, the assumed environmental measure. In this paper we undertake an alternative stated preference (SP) approach that eliminates the potential for unobserved confounders and where the measure of environmental quality is explicitly presented to respondents. We examine how homeowners in the United Kingdom and Italy value mortality risk reductions by asking them to choose among hypothetical variants of their home that differ in terms of mortality risks from air pollution and price. To our knowledge this is the first stated preference study examining respondents’ willingness to pay for properties using a quantitative and clearly specified measure of health risks. We find that Italian homeowners hold a value of a statistical life (VSL) of about €6.4 million, but UK homeowners tend to hold a much lower VSL (€2.1 million). This may be due to the fact that respondents in the UK do not perceive air pollution where they live to be as threatening, and actually live in cities with relatively low air pollution levels. Exploiting part of our experimental design, we find that Italian homeowners value a reduction in the risk of dying from cancer more than from other causes, but UK respondents do not hold such a premium. We also find that those who face higher baseline risks, due to higher air pollution levels where they live, hold a higher VSL, especially in the UK. In both countries, the VSL is twice as large among individuals who perceive air pollution where they live as relatively high.
    Keywords: Home Values, Air Pollution, Stated Preference, Vsl, Value of Statistical Life, Value of a Prevented Fatality, Health Risks, Cancer Premium
    Date: 2013–07
  7. By: McKenzie, David J.; Woodruff, Christopher
    Abstract: Business training programs are a popular policy option to try to improve the performance of enterprises around the world. The last few years have seen rapid growth in the number of evaluations of these programs in developing countries. We undertake a critical review of these studies with the goal of synthesizing the emerging lessons and understanding the limitations of the existing research and the areas in which more work is needed. We find that there is substantial heterogeneity in the length, content, and types of firms participating in the training programs evaluated. Many evaluations suffer from low statistical power, measure impacts only within a year of training, and experience problems with survey attrition and measurement of firm profits and revenues. Over these short time horizons, there are relatively modest impacts of training on survivorship of existing firms, but stronger evidence that training programs help prospective owners launch new businesses more quickly. Most studies find that existing firm owners implement some of the practices taught in training, but the magnitudes of these improvements in practices are often relatively modest. Few studies find significant impacts on profits or sales, although a couple of the studies with more statistical power have done so. Some studies have also found benefits to microfinance organizations of offering training. To date there is little evidence to help guide policymakers as to whether any impacts found come from trained firms competing away sales from other businesses versus through productivity improvements, and little evidence to guide the development of the provision of training at market prices. We conclude by summarizing some directions and key questions for future studies.
    Keywords: business training; consulting; firm productivity; randomized experiments
    JEL: J16 L26 M53 O12
    Date: 2013–07
  8. By: Kate Ho; Ariel Pakes
    Abstract: We estimate a preference function which rationalizes hospital referrals for privately-insured birth episodes in California. The function varies across insurers and is additively separable in: a hospital price paid by the insurer, the distance traveled, and plan and severity-specific hospital fixed effects (capturing various dimensions of hospital quality). We use an inequality estimator that allows for errors in price and detailed hospital-severity interactions and obtain markedly different results than those from a logit. The inequality estimator indicates that insurers with more capitated physicians are more responsive to hospital prices. Capitated plans are willing to send patients further to utilize similar-quality lower-priced hospitals; but the trade-off between quality and costs does not vary with capitation rates.
    JEL: I11 L1
    Date: 2013–08

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