nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2014‒11‒01
eleven papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Controlling for the effects of information in a public goods discrete choice model By Mikolaj Czajkowski; Nick Hanley; Jacob LaRiviere
  2. Labor supply as a discrete choice among latent jobs: Unobserved heterogeneity and identification By John K. Dagsvik; Zhiyang Jia
  3. The Effects of Experience on Preferences: Theory and Empirics for Environmental Public Goods By Mikolaj Czajkowski; Nick Hanley; Jacob LaRiviere
  4. Predictive Validity of Stated Preference Data: Evidence from Mountain Bike Park Visits Before and After Trail System Expansion By Kevin Atkinson; John C. Whitehead
  5. Misperception of Consumption: Evidence from a Choice Experiment By Seeun Jung; Yasuhiro Nakamoto,; Masayuki Sato; Katsunori Yamada
  6. EMU sovereign debt market crisis: Fundamentals-based or pure contagion? By Marta Gómez-Puig; Simón Sosvilla-Rivero
  7. Non-response Subgroup-tailored Weighting: The Choice of Variables and the Set of Respondents Used to Estimate the Weighting Model By Sadig, Husam
  8. Non-farm enterprises in rural Africa : new empirical evidence By Nagler, Paula; Naude, Wim
  9. Voting with their feet ? access to infrastructure and migration in Nepal By Shilpi, Forhad; Sangraula, Prem; Li, Yue
  10. Interbank Lending and Distress: Observables, Unobservables, and Network Structure By Craig, Ben R.; Koetter, Michael; Kruger, Ulrich
  11. Private Schools and "Latino Flight" from Black Schoolchildren By Fairlie, Robert

  1. By: Mikolaj Czajkowski (Faculty of Economic Sciences, University of Warsaw, Poland); Nick Hanley (School of Geography and Sustainable Development, University of St. Andrews); Jacob LaRiviere (Department of Economics, University of Tennessee)
    Abstract: This paper develops a reduced form method of controlling for differences in information sets of subjects in public good discrete choice models, using stated preference data. The main contribution of our method comes from accounting for the effect of information provided during a survey on the mean and the variance of individual-specific scale parameters. In this way we incorporate both scale heterogeneity as well as observed and unobserved preference heterogeneity to investigate differences across an d within information treatments. Our approach will also be useful to researchers who want to combine stated preference data sets while controlling for scale differences. We illustrate our approach using the data from a discrete choice experiment study of a biodiversity conservation program and find that the mean of individual -specific scale parameters and its variance in the sample is sensitive to the information set provided to the respondents.
    Keywords: information, uncertainty, choice modelling, information effects, scale, scale heterogeneity, G-MNL, combined datasets
    JEL: Q51 C51 D03 D83 D61
    Date: 2014–07
  2. By: John K. Dagsvik; Zhiyang Jia (Statistics Norway)
    Abstract: This paper discusses aspects of a framework for modeling labor supply where the notion of job choice is fundamental. In this framework, workers are assumed to have preferences over latent job opportunities belonging to worker-specific choice sets from which they choose their preferred job. The observed hours of work and wage is interpreted as the job-specific hours and wage of the chosen job. The main contribution of this paper is an analysis of the identification problem of this framework under various conditions, when conventional cross-section micro-data are applied. The modeling framework is applied to analyze labor supply behavior for married/cohabiting couples using Norwegian micro data. Specifically, we estimate two model versions with in the general framework. Based on the empirical results, we discuss further qualitative properties of the model versions. Finally, we apply the preferred model version to conduct a simulation experiment of a counterfactual policy reforms.
    Keywords: labor supply; non-pecuniary job attributes; latent choice sets; random utility models; identification
    JEL: J22 C51
    Date: 2014–09
  3. By: Mikolaj Czajkowski (Faculty of Economic Sciences, University of Warsaw, Poland); Nick Hanley (School of Geography and Sustainable Development, University of St. Andrews); Jacob LaRiviere (Department of Economics, University of Tennessee)
    Abstract: This paper develops a choice model for environmental public goods which allows for consumers to learn about their preferences through consumption experiences. We develop a theoretical model of Bayesian updating, perform comparative statics over the model, and show how the theoretical model can be consistently incorporated into a reduced form econometric model. Our main findings are that in a Random Utility Model (RUM) discrete choice model, a subject’s scale should increase and the variability of scale should decrease with experience if subjects are Bayesians. We then estimate the model using field data regarding preferences for one particular public good, water quality. We find strong evidence that additional experience increases scale, thereby makes consumer preferences more predictable from the econometrician’s perspective. We find supportive but less convincing evidence that experience decreases the variability of scale across subjects.
    Keywords: Bayesian updating,choice experiment,learning,scale, scale variance
    JEL: C51 D83 Q51 H43
    Date: 2014–09
  4. By: Kevin Atkinson; John C. Whitehead
    Abstract: This paper investigates the validity of stated preference data for use in recreation demand estimation. We use stated preference and revealed preference data from users of a mountain bike park collected before and after an expansion of the trail system. The ex-ante stated preference data elicited before the change exhibits hypothetical bias, but, it would provide useful information for demand prediction. Key Words: hypothetical bias, recreation demand, revealed preference, stated preference
    JEL: Q26
    Date: 2014
  5. By: Seeun Jung; Yasuhiro Nakamoto,; Masayuki Sato; Katsunori Yamada (Université de Cergy-Pontoise, THEMA)
    Abstract: We investigate people's dierent conceptions of the economic term consump- tion when comparing with others. An Internet-based hypothetical discrete choice experiment was conducted with Japanese participants. As in other relative income comparison studies, we found that own consumption and own saving had a positive impact on utility, whereas the consumption and saving of a reference person had a negative impact on utility. However, the results show that the magnitudes of consumption and saving dier in size; saving could aect utility much more than consumption for the Japanese subjects. By using scope tests, we found that the impact of own consumption is not monotonic and so does not necessarily increase utility. This calls into question the conventional assumption of the monotonicity of \the utility of consumption"; consumption could be perceived as a negative good. Our results, therefore, provide some evidence that, in reality, people understand and perceive the economic terms dierently from what economists would expect. Furthermore, when considering the consumption of others as well as their own, the size of the discrepancy is even bigger.
    Keywords: Relative Utility; Choice Experiment; Misperception of Economic Terms
    JEL: C91 A13 D91 J17
    Date: 2014
  6. By: Marta Gómez-Puig (Department of Economic Theory, Universitat de Barcelona); Simón Sosvilla-Rivero (Department of Quantitative Economics, Universidad Complutense de Madrid)
    Abstract: We empirically investigate whether the transmission of the recent crisis in euro area sovereign debt markets was due to fundamentals-based or pure contagion. To do so, we examine the behaviour of EMU sovereign bond yield spreads with respect to the German bund for a sample of both central and peripheral countries from January 1999 to December 2012. First we apply a dynamic approach to analyse the evolution of the degree of Granger-causality within the 90 pairs of sovereign bond yield spreads in our sample, in order to detect episodes of significantly increased causality between them (which we associate with contagion) and episodes of significantly reduced interconnection (which we associate with immunisation). We then use an ordered logit model to assess the determinants of the occurrence of the episodes detected. Our results suggest the importance of variables proxying market sentiment and of variables proxying macrofundamentals in determining contagion and immunisation outcomes. Therefore, our findings underline the coexistence of “pure” and “fundamentals-based contagion” during the recent European debt crisis.
    Keywords: Sovereign bond spreads, contagion, Granger-causality, time-varying approach, euro area, ordered logit model
    JEL: C35 C53 E44 F36 G15
    Date: 2014–05
  7. By: Sadig, Husam
    Abstract: The use of the logistic regression model to predict the probability of response and create non-response weights is classic. In most cases, the model is estimated using socio-demographic variables and all units in the selected sample. However, substantive analyses are often restricted to a sub-group of the sample. This paper investigates whether weights are more effective if they are designed using variables correlated with the response propensity in the sub-group in question and sample units in the selected sub-group using data from the British Household Panel Survey (BHPS). The findings demonstrate that, for some estimates, the tailored weights results in significantly different results than the usual weights.
    Date: 2014–10–17
  8. By: Nagler, Paula; Naude, Wim
    Abstract: Although non-farm enterprises are ubiquitous in rural Sub-Saharan Africa, little is yet known about them. The motivation for households to operate enterprises, how productive they are, and why they exit the market are neglected questions. Drawing on the Living Standards Measurement Study -- Integrated Surveys on Agriculture and using discrete choice, selection model and panel data estimators, this paper provide answers using data from Ethiopia, Niger, Nigeria, Malawi, Tanzania, and Uganda. The necessity to cope following shocks, seasonality in agriculture, and household size can push rural households into operating a non-farm enterprise. Households are also pulled into entrepreneurship to exploit opportunities. Access to credit and markets, household wealth, and the education and age of the household head are positively associated with the likelihood of operating an enterprise. The characteristics are also associated with the type of business activity a household operates. Rural and female-headed enterprises and enterprises with young enterprise owners are less productive than urban and male-owned enterprises and enterprises with older owners. Shocks have a negative association with enterprise operation and productivity and a large share of rural enterprises does not operate continuously over a year. Enterprises cease operations because of low profits, a lack of finance, or the effects of idiosyncratic shocks. Overall the findings are indicative that rural enterprises are"small businesses in a big continent"where large distances, rural isolation, low population density, and farming risks limit productivity and growth.
    Keywords: Access to Finance,Microfinance,Labor Policies,Rural Poverty Reduction,E-Business
    Date: 2014–10–01
  9. By: Shilpi, Forhad; Sangraula, Prem; Li, Yue
    Abstract: Using bilateral migration flow data from the 2010 population census of Nepal, this paper provides evidence on the importance of public infrastructure and services in determining migration flows. The empirical specification, based on a generalized nested logit model, corrects for the non-random selection of migrants. The results show that migrants prefer areas that are nearer to paved roads and have better access to electricity. Apart from electricity's impact on income and through income on migration, the econometric results indicate that migrants attach substantial amenity value to access to electricity. These findings have important implications for the placement of basic infrastructure projects and the way benefits from these projects are evaluated.
    Keywords: Transport Economics Policy&Planning,Population Policies,Economic Theory&Research,Anthropology,Public Sector Economics
    Date: 2014–09–01
  10. By: Craig, Ben R. (Federal Reserve Bank of Cleveland); Koetter, Michael (Frankfort School of Financial Management); Kruger, Ulrich (Deutsche Bundesbank)
    Abstract: We provide empirical evidence on the relevance of systemic risk through the interbank lending channel. We adapt a spatial probit model that allows for correlated error terms in the cross-sectional variation that depend on the measured network connections of the banks. The latter are in our application observed interbank exposures among German bank holding companies during 2001 and 2006. The results clearly indicate significant spillover effects between banks’ probabilities of distress and the financial profiles of connected peers. Better capitalized and managed connections reduce the banks own risk. Higher network centrality reduces the probability of distress, supporting the notion that more complete networks tend to be more stable. Finally, spatial autocorrelation is significant and negative. This last result may indicate too-many-to-fail mechanics such that bank distress is less likely if many peers already experienced distress.
    Keywords: Spatial Autoregression; interbank connections; bank risk
    JEL: E31 G21
    Date: 2014–10–02
  11. By: Fairlie, Robert
    Abstract: Several recent studies provide evidence that the choice between private and public school among white students is influenced by the racial composition of the local student population.  None of these studies, however, examines whether Latinos are also fleeing to private schools in response to black schoolchildren.  I explore the "Latino flight" hypothesis using data from the National Educational Longitudinal Study (NELS) and a recently released confidential dataset from the National Center for Educational Statistics (NCES).  In probit regressions for the probability of attending private school among Latinos, I find a large, positive and statistically significant coefficient on the black share of the school-age population.  The coefficient estimates imply that a 10 percentage point increase in the black share increases the probability of private school attendance by 25.7 to 33.2 percent among Latino 8th graders and 35.2 to 52.2 percent among Latino 10th graders.  I interpret these results as providing evidence of "Latino flight" from public schools into private schools.  I do not find evidence that Latinos respond differently to black schoolchildren than do whites.
    Keywords: Education, Social and Behavioral Sciences, education, private school, latino, minority, flight
    Date: 2014–09–23

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