nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2014‒05‒04
six papers chosen by
Edoardo Marcucci
Universita' di Roma Tre

  1. The Importance of Community Attributes in Household Residential Location Decisions By Mónica Ospina; Santiago Bohórquez; Andrea Serna; Laura Castañeda
  2. Response to a social dilemma : an analysis of the choice between an economic and an environmental optimum in a policy making context By Nerhagen, Lena; Pyddoke , Roger; Jussila Hammes, Johanna
  3. Payment Types and Participation in Payment for Ecosystem Services Programs: Stated Preferences of Landowners By Nordén, Anna
  4. Do Artistic Images Affect the Willingness to Buy Carbon Offsets? An Empirical Study By Turner, Robert
  5. Agglomeration effects of inter-firm backward and forward linkages: evidence from Japanese manufacturing investment in China By Nobuaki Yamashita; Toshiyuki Matsuura; Kentaro Nakajima
  6. Ranking distributions of monotone attributes By Herrero, Carmen; Villar, Antonio

  1. By: Mónica Ospina; Santiago Bohórquez; Andrea Serna; Laura Castañeda
    Abstract: This study identifies how community attributes affect household residential location decisions in Medellin, Colombia. The empirical model applies the revealed preference principle: each household is assumed to have made an optimal location decision given a set of alternatives. Using household data, we estimate a conditional logit choice model for residential communities by controlling for both individual and neighborhood characteristics, including environmental attributes. The set of alternatives for each household are defined using the applicable neighborhood’s socioeconomic and geographic characteristics. The results provide an estimate of household preferences for the many characteristics of the potential choices in the choice set. In the case of Medellin, we found positive and significant preferences for public provided goods such as public schools and security but relatively low preferences for recreational and cultural spaces; households prefer that the latter be provided by the private sector.
    Keywords: Housing Demand; Neighborhood Characteristics; Environmental Economics
    JEL: R21 R23 Q50
    Date: 2013–08–27
  2. By: Nerhagen, Lena (VTI); Pyddoke , Roger (VTI); Jussila Hammes, Johanna (VTI)
    Abstract: Many countries have begun to require benefit-cost analysis as a way of informing key regulatory decisions. However, its actual use seem to be limited, especially in the area of environmental, health, and safety regulation. Reasons for this seem to be lack of knowledge and experience among decision makers and that established quality objectives prevent the use of this type of analysis and deliberation. We present the results from an experiment designed to investigate choice behavior in a public sector context. Students with different academic majors were asked to act as decision makers. There were two choice situations: one in a municipality deciding on an action plan and one in a government agency having to propose a national limit value. In both settings, the outcome that would pass a benefit-cost test would not achieve a natural state of the environment, hence a social dilemma choice situation. We find that a majority of the respondents prefer outcomes that can be considered environmental “optimum” but that there is a difference depending on academic major. The choice context also influences the response behavior and so does the information about an international standard. The latter increases the likelihood to accept alternatives that imply higher costs.
    Keywords: Benefit-cost analysis; Policy making; Environmental quality objectives; Discrete-choice analysis; Willingness-to-pay
    JEL: R40
    Date: 2014–04–29
  3. By: Nordén, Anna (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Because the effectiveness of payment for ecosystem services (PES) programs depends on landowners’ engagement, understanding the relationship between the type of payment and participation is a key issue. This paper reports on a choice experiment that quantifies landowners’ preferences for cash and educational in-kind payment. The main results indicate a positive correlation between participation in a PES contract and the magnitude of the cash payment, while participation seems uncorrelated with the magnitude of the educational inkind payment. In addition, we investigate the mix of payment types and heterogeneity in preferences, which can help policymakers design strategies to increase participation.
    Keywords: payment for ecosystem services; cash payments; in-kind payments; stated preferences; land owners
    JEL: Q28 Q57
    Date: 2014–04
  4. By: Turner, Robert (Department of Economics, Colgate University)
    Abstract: This is the draft of a chapter from a forthcoming book related to the conference Sensing Change: Mapping the Climatic Imaginary through Art, Science and History, held at the Chemical Heritage Foundation November 7-9, 2013. The artwork shown in the exhibit Sensing Change is part of a thriving environmental art movement. There is a long history of art influencing environmental attitudes and to some extent behavior. Historically such art has used what photography critic Vicki Goldberg calls the “pastoral eulogy†approach but there is also a more critical approach that emphasizes the environmental damage and risk associated with human behavior. Ecological artist Ruth Wallen says, “Ecological art work can help engender an intuitive appreciation of the environment, address core values, advocate political action, and broaden intellectual understanding.†But there is little evidence about whether people change their behavior in response to this sort of art. This chapter uses a contingent choice survey (a kind of choice experiment) to investigate whether exposure to such artwork influences environmental behavior, in particular the purchase of carbon offsets. (Purchasing offsets provides funding for activities that reduce net greenhouse gas emissions.) Contingent choice surveys are often used to analyze respondents’ environmental behavior and/or the underlying preferences for environmental goods and resources driving that behavior. In these surveys, respondents choose among a selection of hypothetical or real scenarios comprised of varying levels of different variables. Based on the choices they make, the relative importance of the different variables can be estimated. In the survey upon which this chapter is based, respondents chose from alternative carbon offset purchase options, including the option to buy no offsets. The central questions are as follows: what would make respondents more or less likely to choose to buy no offsets, and did respondents who saw artwork as part of the survey differ systematically from those who didn’t? Subsets of respondents in a choice experiment investigating willingness to buy carbon offsets were shown artistic images related to climate change. One subset was shown photographs from The Canary Project (Susannah Sayler and Edward Morris); another subset was shown images from the Wind Map: Poetry in Motion project (Fernanda Viégas and Martin Wattenberg); a control group was not shown any artistic images. The survey responses were analyzed to explore whether the artistic images affected respondents' willingness to buy carbon offsets. Another issue investigated was whether the images affect the ways in which the willingness to buy carbon offsets is influenced by other factors. These other factors include the types of mitigation efforts being funded by offsets and also personal characteristics of the respondents such as age, income, and adherence to social norms. The results of the split-sample contingent choice survey indicate that respondents who were shown photographs by the Canary Project that illustrate the impacts of climate change were more likely to purchase carbon offsets than were respondents in a control group. This is even though the respondents viewed the images only briefly: typically for less than a minute. Not all artistic images had this effect, though: respondents who saw animated images from the Wind Map Project that illustrate wind speeds and patterns for extreme weather events were actually less willing to buy offsets than the control group. Results indicate that preferences about buying carbon offsets are very heterogeneous, but in all cases the pattern remains that respondents in the treatment group that saw the Canary Project photos are more likely to buy offsets and respondents in the treatment group that saw the Wind Map Project images are less likely to buy offsets. The heterogeneity was driven largely by variables related to social norms and expectations. But the differences across treatment groups were not driven by differences in individual characteristics. The chapter continues with some thoughts about why the responses to the Canary Project and Wind Map Project art differed. The chapter concludes with some ideas for future survey-based research exploring the impact of art on environmental attitudes and behavior.
    Keywords: artistic images, carbon offsets, contingent choice, choice experiments
    JEL: Z11 Q54
    Date: 2014–04–01
  5. By: Nobuaki Yamashita; Toshiyuki Matsuura; Kentaro Nakajima
    Abstract: This paper examines the agglomeration effects of multinational firms on the location decisions of first-time Japanese manufacturing investors in China for the period 1995–2007. This is accomplished by exploiting newly constructed measures of inter-firm backward and forward linkages formed in a home country. The conditional and mixed logit estimates reveal that agglomeration by first-tier suppliers and customers draws subsequent investment into a location. However, such agglomeration effects are not pervasive and do not extend to the second and third tiers. Instead, we find that agglomeration by third-tier suppliers generates a countervailing force, making a location relatively unattractive.
    Keywords: Agglomeration, Backward and forward linkages, Location choice of multinational enterprises
    JEL: F23 L22 R3
    Date: 2014
  6. By: Herrero, Carmen; Villar, Antonio
    Abstract: This paper refers to the ranking of densities that describe the distribution of an attribute in a given set of populations. The key elements of the problem are: (i) The distributions refer to ordered categorical data (e.g. health statuses, educational achievements, prestige positions, satisfaction levels); (ii) The evaluation of each distribution is relative to the others with which it is compared. We propose an evaluation method that is cardinal, complete and transitive, which based on the consistent application of the "willingness to pay" principle and the likelihood of getting better results when making a random extraction. A characterization of this method, in terms of simple properties, is provided.
    Keywords: Ranking distributions, categorical variables, willingness to pay, worth
    JEL: D00 D70 H00
    Date: 2014

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