nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2014‒11‒17
eight papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Discrete Choice Estimation of Risk Aversion By José Apesteguía; Miguel Angel Ballester
  2. Social norms, morals and self-interest as determinants of pro-environment behaviour By Czajkowski, Mikolaj; Hanley, Nicholas; Nyborg, Karine
  3. The Influence of Environmental Concerns on Drivers’ Preferences for Electric Cars By Alexandros Dimitropoulos
  4. Identifying latent interest-groups: An analysis of heterogeneous preferences for income-redistribution By Pfarr, Christian; Schmid, Andreas; Mørkbak, Morten Raun
  5. Cultural Heritage and the Attractiveness of Cities: Evidence from Recreation Trips By Ruben van Loon; Tom Gosens; Jan Rouwendal
  6. Explaining the Differences between Local Currency versus FX-denominated Loans and Deposits in the Central-Eastern European Economies By Judit Temesváry
  7. A discrete choice model of transitions to sustainable technologies By Zeppini, Paolo
  8. A practitioners' guide to gravity models of international migration By Michel Beine; Simone Bertoli; Jesús Fernández-Huertas Moraga

  1. By: José Apesteguía; Miguel Angel Ballester
    Abstract: We analyze the use of discrete choice models for the estimation of risk aversion and show a fundamental flaw in the standard random utility model which is commonly used in the literature. Specifically, we find that given two gambles, the probability of selecting the riskier gamble may be larger for larger levels of risk aversion. We characterize when this occurs. By contrast, we show that the alternative random preference approach is free of such problems.
    Keywords: discrete choice, structural estimation, risk aversion, random utility models, random preference models
    JEL: C25 D81
    Date: 2014–09
  2. By: Czajkowski, Mikolaj; Hanley, Nicholas; Nyborg, Karine
    Abstract: This paper considers the role which selfish, moral and social incentives and pressures play in explaining the extent to which stated choices over pro-environment behaviours vary across individuals. The empirical context is choices over household waste contracts and recycling actions in Poland. A theoretical model is used to show how cost-based motives and the desire for a positive self- and social image combine to determine the utility from alternative choices of recycling behaviour. We then describe a discrete choice experiment designed to empirically investigate the effects such drivers have on stated choices. Using a latent class model, we distinguish three types of individual who are described as duty-orientated recyclers, budget recyclers and homo oeconomicus. These groups vary in their preferences for how frequently waste is collected, and the number of categories into which household waste must be recycled. Our results have implications for the design of future policies aimed at improving participation in recycling schemes.
    Date: 2014–07
  3. By: Alexandros Dimitropoulos (VU University Amsterdam)
    Abstract: We examine the influence of drivers’ environmental concerns on their preferences for different types of plug-in electric vehicles (PEVs). Our empirical approach is built around the results of a large-scale survey among Dutch drivers, where preferences for electric vehicles are elicited through a choice experiment and environmental concerns are reflected in individual responses to Likert-type questions. On this basis, we develop advanced latent class models to study preference heterogeneity and its link to drivers’ socio-demographic background and environmental concerns. We find that environmental concerns are an important predictor of class membership and that highly concerned drivers tend to cluster in classes with a positive stand towards PEVs. High environmental concerns are positively associated with driver’s age and education, while negatively related to d river’s household income.
    Keywords: Latent class, Latent variable, Environmental concern, Electric vehicle, Plug-in hybrid
    JEL: D12 O33 Q58 R41
    Date: 2014–09–22
  4. By: Pfarr, Christian; Schmid, Andreas; Mørkbak, Morten Raun
    Abstract: The German government is strongly involved in redistributing income. For various reasons such as the capacity to govern and social stability this makes a good un-derstanding of the citizens’ respective preferences and their informal coalitions ex-tremely important. The identification of such interest groups is non-trivial as they may be determined by latent characteristics and preferences for redistribution are difficult to measure. The aim of this study is to identify latent interest-groups in the context of preferences for redistribution adopting an inductive approach. The data for the estimation of the WTP values is generated by a DCE, based on a rep-resentative sample of 1,538 German individuals. To identify the latent interest-groups we investigate to which extent respondents can be divided into groups us-ing Latent Class Models thereby accounting for both observable and unobservable heterogeneity within the society. Based on the econometric analysis we can identi-fy six social interest groups that differ regarding their preferences for redistribu-tion and their composition. Both, their preferences regarding the overall budget for redistribution and their preferences regarding the different recipient groups as well as the socio-demographic determinants for group membership are plausible and match well with the current political situation in Germany.
    Keywords: redistribution; interest groups; preferences; choice experiments; latent class models
    JEL: C93 D31 D72
    Date: 2014–09
  5. By: Ruben van Loon (VU University Amsterdam); Tom Gosens (VU University Amsterdam); Jan Rouwendal (VU University Amsterdam)
    Abstract: Many cities are trying to attract tourists by investing in urban amenities. Cultural heritage is an important example and substantial investments are needed to keep ancient inner cities and characteristic monumental buildings in good shape. The costs of these policies are usually clear, the benefits are often much more difficult to assess. This paper attempts to fill part of this gap by studying the destination choices of urban recreation trips that have urban recreation as the main travel motive. We estimate a discrete choice model for destination choice that takes into account the potential importance of unobserved characteristics. The model allows us to compute the marginal willingness to travel for destinations offering more cultural heritage, which we measure as the area of the inner city that has a protected status because of the cultural heritage that is present there.
    Keywords: Cultural heritage, recreation, city marketing
    JEL: C31 D12 R12 R22 L83
    Date: 2014–04–28
  6. By: Judit Temesváry (Department of Economics, Hamilton College)
    Abstract: Foreign currency-based loans and deposits became very popular in Central-Eastern European countries (CEECs) over the 2000-2011 period. This paper employs a structural approach to simultaneously examine the demand-side (consumer-related) and supply-side (bank-related) determinants of the quick spread of FX-based banking. The econometric analysis uses a unique newly constructed dataset on FX and domestic currency loans, deposits and interest rates, covering 16 CEECs overtime. Results show that deregulation and cheap funding from parents abroad helped fuel FX lending. There is substantial heterogeneity across market segments, currencies and maturities. Corporate sector FX lending is fundamentally different from retail and mortgage markets.
    Keywords: Bank lending, Interest rate choices, Discrete choice, Simultaneous equations, Cross-country analysis
    JEL: E44 F31 G21 G28
    Date: 2014–01
  7. By: Zeppini, Paolo
    Abstract: We propose a discrete choice model of sustainable transitions from dirty to clean technologies. Agents can adopt one technology or the other, under the influence of social interactions and network externalities. Sustainable transitions are addressed as a multiple equilibria problem. A pollution tax can trigger a sudden transition as a bifurcation event, at the expenses of large policy efforts. Alternatively, periodic dynamics can arise. Technological progress introduced in the form of endogenous learning curves stands as a fundamental factor of sustainable transitions. For this to work, the positive feedback of network externalities and social interaction should be reduced initially, for instance by promoting niche markets of clean technologies and making technological standards and infrastructure more open. Traditional policy channels such as pollution tax and feed-in-tariffs have an auxiliary - yet important - role in our model. Compared to feed-in-tariffs, a pollution tax promotes smoother and faster transitions.
    Date: 2014
  8. By: Michel Beine (CREA, Université de Luxembourg); Simone Bertoli (CERDI, University of Auvergne and CNRS); Jesús Fernández-Huertas Moraga (FEDEA and IAE, CSIC)
    Abstract: The use of bilateral data for the analysis of international migration is at the same time a blessing and a curse. It is a blessing since the dyadic dimension of the data allows researchers to address a number of previously unanswered questions, but it is also a curse for the various analytical challenges it gives rise to. This paper presents the theoretical foundations of the estimation of gravity models of international migration, and the main difficulties that have to be tackled in the econometric analysis, such as the nature of migration data, how to account for multilateral resistance to migration or endogeneity. We also review some empirical evidence that has considered these issues.
    Keywords: Gravity equation; discrete choice models; international migration
    JEL: F22 C23
    Date: 2014

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