nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2015‒01‒26
seventeen papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Are models and respondents talking the same language: evidence from stated and inferred discontinuous preferences in a choice experiment valuing public goods? By Espinosa, Maria; Rodriguez, Macario; Madureira, Livia; Santos, Jose Lima; Gomez y Paloma, Sergio
  2. Consumer willingness to pay for food quality labels: evaluating the prosciutto di parma PDO quality differentiation strategy By Capelli, Maria Giacinta; Menozzi, Davide; Arfini, Filippo
  3. Information, Random Regret Minimisation, Random Utility Maximisation: Willingness to pay for Renewable Energy By Longo, Alberto; Boeri, Marco
  4. Consumer preferences for riding lessons in Finland, Sweden and Latvia By Tienhaara, Annika; Pouta, Eija; Lunner Kolstrup, Christina; Pinzke, Stefan; Janmere, Lana; Järvinen, Maija
  5. Modelling the Participation Decision in Agri-Environmental Schemes By Murphy, Geraldine; O’Donoghue, Cathal; Hynes, Stephen; Murphy, Eithne
  6. Managing integration in bio-energy chains by promoting a collective action By Cembalo, Luigi; Pascucci, Stefano; Tagliafierro, Carolina; Caracciolo, Francesco
  7. Are ranking preferences information methods comparable with the choice experiment information in predicting actual behavior? By Yangui, Ahmed1; Akaichi, Faiçal; Costa-Font, Montserrat; Gil, Jose Maria
  8. Farmers’ Preferences and Attitudes Toward Porcine Reproductive and Respiratory Syndrome (PRRS) Vaccination in Vietnam By Zhang, Haifeng; Kono, Hiroichi; Kubota, Satoko
  9. Consumer Willingness-to-Pay for Non-taste Attributes in Beef Products By Li, Xiaogu; Jensen, Kimberly L.; Clark, Christopher D.; Lambert, Dayton M.
  10. Determinants of Farm Decision to Enter Land Diversion: The Case of Upland Farmers in Northern Thailand By Phetcharat, Chaowana; Chalermphol, Juthathip
  11. Citizens’ preferences for policies to conserve agricultural genetic resources By Eija, Pouta; Annika, Tienhaara; Heini, Ahtiainen
  12. House Value, Crime and Residential Location Choice By ZHANG, ZHAOHUA; HITE, DIANE
  13. A choice experiment of farmer’s acceptance and adoption of irrigation water supply management policies By Alcon, Francisco; Tapsuwan, Sorada; Brouwer, Roy; de Miguel, María D.
  15. Willingness to contribute to the management of recreational quality on private lands in Finland By Lankia, Tuija; Neuvonen, Marjo; Pouta, Eija; Sievänen, Tuija
  16. Are labels delivering what they intend? Explicit value of fair-trade labels versus implicit value of fair trade characteristics By Vlaeminck, Pieter; Vandoren, Jana; Vranken, Liesbet
  17. Kenyan perceptions of aflatoxin: an analysis of raw milk consumption By Walke, Maria; Mtimet, Nadhem; Baker, Derek; Lindahl, Johanna; Hartmann, Monika; Grace, Delia

  1. By: Espinosa, Maria; Rodriguez, Macario; Madureira, Livia; Santos, Jose Lima; Gomez y Paloma, Sergio
    Abstract: In the choice experiment framework, it is assumed that respondents consider all the attributes when making their choices. However, there is evidence that respondents may not consider all the attributes. This study has proved that in our Choice Experiment survey evaluating public goods, there is significant correlation between the stated preferences declared in a continuous scale by the respondents and the parameter estimates inferred from the models. The correlation has been tested for the coefficient of variation estimated in a Random Parameter Logit and the probability of ignoring derived from a 2K latent class model.
    Keywords: Choice Experiments, discontinuous preferences, stated preferences, inferred preferences, 2k latent class model, Consumer/Household Economics,
    Date: 2014–08
  2. By: Capelli, Maria Giacinta; Menozzi, Davide; Arfini, Filippo
    Abstract: This poster paper aims to investigate the consumers’ preferences and willingness to pay for different quality strategies associated with the designations Prosciutto di Parma PDO. After a qualitative analysis, an on-line choice experiment was conducted on a sample of 250 Italian consumers. A multinomial logit model was tested to assess the relative importance of quality attributes. The results show that price, a “high quality” PDO label and the ageing period are the most important attributes for consumers. These findings provide Consortium members with an important food for thought for the development of future strategies for the Designation of Origin.
    Keywords: quality label, choice experiment, willingness to pay (WTP), Prosciutto di Parma PDO, Consumer/Household Economics,
    Date: 2014–08
  3. By: Longo, Alberto; Boeri, Marco
    Abstract: We investigate how different levels of information affect respondents’ preferences as well as choice behaviour in choice experiments by analysing respondents’ choices using two choice paradigms: the Random Utility Maximisation (RUM) and the Random Regret Minimization (RRM). The RRM offers a tractable, regret-based model complementary to the dominant RUM. Analysing choice related to hypothetical programmes for the promotion of renewable energy, we find that varying the level of information does not affect preferences and scale, whilst it does affect the choice paradigm. Additional information increases the probability that a respondent’s choices are better explained by the RUM than the RRM.
    Keywords: Random Regret Minimization, Random Utility Maximisation, renewable energy, energy security, greenhouse gases emissions, Consumer/Household Economics, Resource /Energy Economics and Policy,
    Date: 2014–08
  4. By: Tienhaara, Annika; Pouta, Eija; Lunner Kolstrup, Christina; Pinzke, Stefan; Janmere, Lana; Järvinen, Maija
    Abstract: Services by equine sector offer a new livelihood for farms around cities, but studies focusing on the demand for these services are limited. Knowledge of the clients’ preferences enables systematic development of the riding services. We examined a riding lesson choice, and attributes affecting it, in Finland, Sweden and Latvia using a choice experiment method. The latent class model revealed three distinctive consumer groups in each country: one with low interest in lessons, one with recreational focus and one interested in skills. Based on the model, we estimated willingness to pay for a riding lesson with different attribute combinations.
    Keywords: equine sector, riding lesson, choice experiment, preference heterogeneity, Consumer/Household Economics,
    Date: 2014–08
  5. By: Murphy, Geraldine; O’Donoghue, Cathal; Hynes, Stephen; Murphy, Eithne
    Abstract: Understanding what influences farmers’ decisions to participate in a voluntary agri-environmental scheme(AES) is essential for gauging scheme success. The Rural Environment Protection Scheme (REPS) was a voluntary AES that was available to all Irish farmers from 1994 to 2009. This paper models the participation decision of Irish farmers in REPS using a 15-year panel dataset. The approach taken is novel: actual values for gross outputs, direct costs and working hours are compared to simulated counterfactual values using a conditional logit framework. Model results show that Irish farmers behave rationally by maximising utility from both consumption and leisure but that their preferences differ by region and over time. In addition, the participation functions of viable and non-viable farmers are dissimilar in a number of ways. Policy makers may therefore need to target both groups of farmers using separate schemes in the future.
    Keywords: Agri-Environmental Schemes, Choice Modelling, Environmental Economics and Policy, Research Methods/ Statistical Methods,
    Date: 2014–08
  6. By: Cembalo, Luigi; Pascucci, Stefano; Tagliafierro, Carolina; Caracciolo, Francesco
    Abstract: This paper discusses how to develop and manage integration, coordination and cooperation (collective action) in bio-energy supply chains. Farmers decision on whether or not to participate in a contract farming scheme have been investigated, particularly assessing the trade-offs between the contract attributes and their impact on the likelihood to participate. A stated preference model has been implemented where respondents were asked to choose between alternative contracts with varying attribute levels to start biomass cultivation. Results show that participation is mainly influenced by minimum price guaranteed, contract length, and re-negotiation before the end of a contract.
    Keywords: Bio-energy supply chain, Contract farming, Choice modelling, Italy, Industrial Organization,
    Date: 2014–08
  7. By: Yangui, Ahmed1; Akaichi, Faiçal; Costa-Font, Montserrat; Gil, Jose Maria
    Abstract: Parting from the issue which elicited value method best predict real consumer’ behavior, this study compares the ability of hypothetical and non-hypothetical choice experiment respect to incentive compatible ranking conjoint analysis and sequential best worst scaling in terms of estimated partworths, internal and external predictive power, estimated WTP, and participants’ response consistency. In general, the results reveal higher preferences regularity between the respondents across the different treatments implying not statistically difference in the marginal participants’ WTP. Additionally, the participants behave similarly whether there are asked to choose or to state their most preferred through two ranking elicitation mechanism. However, the advantage of the best worst scaling in it cognitive process which could be considered clearness for participants has been illustrated in statistical significant increment of external predictive power of the method compared with ranking conjoint analysis
    Keywords: conjoint analysis, best worst scaling, external validity, experimental economics, hypothetical bias, Consumer/Household Economics,
    Date: 2014–08
  8. By: Zhang, Haifeng; Kono, Hiroichi; Kubota, Satoko
    Abstract: Vietnam is a major pork producing country in Asia, but the pig farmers’ livelihood is threatened by Porcine Reproductive and Respiratory Syndrome (PRRS). Although vaccination is the most practical method of choice for PRRS control, the vaccination percentage is very low. To help inform PRRS vaccine development and policy, our research employed the choice experiment (CE) method to assess pig farmers’ attitudes toward and willingness to pay (WTP) for a PRRS vaccine. The results showed a high positive WTP value for the PRRS vaccination program in Vietnam. This study provides insight into the possibility of increasing the PRRS vaccination percentage.
    Keywords: CE, PRRS, vaccine, Vietnam, WTP, Consumer/Household Economics, Health Economics and Policy,
    Date: 2014–08
  9. By: Li, Xiaogu; Jensen, Kimberly L.; Clark, Christopher D.; Lambert, Dayton M.
    Abstract: Beef is the most commonly consumed red meat and a major source of protein for US consumers. High-quality beef products are sold with substantial premiums, but the specific beef attributes by which high-quality standards are determined remain ambivalent. Most attribute studies have focused on palatability characteristics such as tenderness, juiciness, fatness, or marbling. More recent research finds increasing consumer interest in beef attributes that are not directly taste-related, such as food safety, organic, environmental impacts, local production, or DNA traceability. However, these studies have focused on a single non-taste attribute. Questions remain as to which of those attributes might have more of an influence on consumer preferences for beef products and whether there are interactions between these attributes in terms of consumer willingness-to-pay (WTP) for the beef product in question. This study uses results from a national survey of consumers to examine how the presence of multiple quality indicators of attributes influence WTP for beef products, which of these attributes have a relatively greater impact on consumer choice, and how these impacts vary based on consumer demographics. A WTP space modeling framework is used to analyze the survey data, allowing for variability and scaling of preferences.
    Keywords: Beef, Choice Experiment, Label, Willingness-to-Pay Space, Agricultural and Food Policy, Environmental Economics and Policy, Livestock Production/Industries, Q18, Q54, Q56, Q58,
    Date: 2015
  10. By: Phetcharat, Chaowana; Chalermphol, Juthathip
    Abstract: Mixed cropping has advantages to famers because it allows diversification for reducing risk, which caused by unfavorable weather and market price variability. This research aims to analyze and determine factors that influence farmer’s decision to transfer from growing traditional crops (a single crop such as corn and lychee) to diversified crops. The logit model was used to identify factors associated with the farmer’s decision. Models based on a face-face survey of 185 respondents from six villages in Lampang province belonging to the highland community of northern Thailand. The results showed that farmer’ decision to enter into land diversion was different in terms of farmers’ socio-economic factor such as the education level of the farmer and household debt. The government subsidy and technical assistance of the agricultural extension services also significantly influent the farmer’s decision to accept the crop diversified method.
    Keywords: land diversion, upland farmer, logit model, co-cultivation, Farm Management, Institutional and Behavioral Economics,
    Date: 2015–01
  11. By: Eija, Pouta; Annika, Tienhaara; Heini, Ahtiainen
    Abstract: To evaluate conservation policies of agricultural genetic resources (AgGR), information on the use and non-use values of plant varieties and animal breeds, as well as on the preferences for in situ and ex situ conservation are needed. Here we present the results of a choice experiment of AgGR conservation programs in Finland. The findings indicate that citizens’ have high interest in the conservation of native breeds and varieties, but also that there is heterogeneity in preferences between citizens. Five groups can be identified: one implying lexicographic preferences, two with reasoned choices, one indicating ambivalence and one with status quo preferences.
    Keywords: native breeds, native varieties, choice experiment, preference heterogeneity, Institutional and Behavioral Economics, Public Economics,
    Date: 2014–08
    Abstract: Households choose where to live by trading off wages, house prices and local amenities. In this paper, I estimate the effect of crime on household location choice using a two-stage residential sorting model which incorporates the effect of mobility cost. The choice set in this paper is defined at the level of the metropolitan areas. The results from the second stage show that people are willing to pay more to move to a location with lower violent crime occurrences and are willing to pay more to move to a place with higher property crime; however, the effect of violent crime is larger than property crime. When recovering the willingness to pay (WTP) for the two types of crime using elasticities, the results show that people are willing to pay $651 and $977 for a one hundred unit decrease in violent crime and $23 and $27 for a one hundred unit increase in property crime for 2005 and 2010 respectively. The difference in difference results for the sorting model show that people are willing to pay less to move to a location in which the police number increases, and pay more to move to a location where the crime rate decreases while police force increases. The results of the difference in difference analysis, shows that the elasticity of WTP for the increase in police number in the hedonic price model, is slightly lower than that from the sorting model.
    Keywords: Location choice, Crime Rate, Residential Sorting Model, Consumer/Household Economics, Research Methods/ Statistical Methods, R23, R21, C35,
    Date: 2015–02
  13. By: Alcon, Francisco; Tapsuwan, Sorada; Brouwer, Roy; de Miguel, María D.
    Abstract: The efficient and sustainable use of water is becoming standard practice in water scarce regions and pro-active policy initiatives are taken to increase supply reliability considering the local context. The aim of this paper is to evaluate farmers’ acceptance of policy strategies to increase water supply reliability in a water scarce river basin in the south east of Spain. Results from a choice experiment study suggest that farmers are willing to pay double water prices to ensure water supply reliability, through government supply guaranteed programs. However, they are averse to any other institutional changes that could assist the government to achieve increased water supply.
    Keywords: irrigation water, Spain, choice experiment, water policy, Institutional and Behavioral Economics,
    Date: 2014–08
  14. By: De Silva, Nirodha; Williams, Ryan
    Abstract: Abstract The decline of the groundwater in the Ogallala Aquifer may create an uncertainty for water availability in the associated states in the future. Effective policy reforms are essential to determine efficient present and future use of water resources. Therefore, this study explores the option value for reducing current groundwater use to ensure the water availability in the Ogallala aquifer for future use. A double- bounded referendum format contingent valuation survey was carried out to investigate households’ preferences and the mean willingness to pay (WTP) of households for conserving the groundwater is empirically examined using a censored regression model. The estimated mean WTP to conserve one million acre feet of water for future use is $17.66 and the total willingness to pay is $28.96 million. The results indicate education and prior knowledge about the aquifer are significant determinants that are positively related to WTP whereas age is a significant factor that is negatively related to WTP in conserving the groundwater in the Ogallala Aquifer. This study provides policy makers with valuable information for building effective and sustainable policies, and the value estimates provided by this study will help future studies of groundwater use on the Texas High Plains.
    Keywords: Contingent Valuation, Willingness to pay, Groundwater, Ogallala Aquifer, Environmental Economics and Policy, Q50 Q51 Q58 Q59,
    Date: 2015–01
  15. By: Lankia, Tuija; Neuvonen, Marjo; Pouta, Eija; Sievänen, Tuija
    Abstract: In Finland, privately owned nature areas are widely used for recreation due to open public access. However, since landowners are not obligated to take everyman’s rights into consideration when making management decisions, the recreational quality of nature areas is not guaranteed for users. We examined whether individual recreationists on private lands would be willing purchase management actions from landowners that influence recreational quality. In addition to willingness to pay, we assessed willingness to con-tribute labor to such actions. The results demonstrated that about half of the recreationists who participated in our survey were willing to contribute labor and about 10% were willing to pay to direct the management of their typical recreation site on private lands. The mean willingness to pay was 92 euros per year and the mean willingness to contribute labor 3.5 days per year. A latent class regression model revealed that recreationists were not, however, completely homogeneous in their preferences for the actions or in their preferred contribution forms. On the basis of the results, there is moderate demand from recreationists for management to improve recreational quality and the potential for local landscape management arrangements that allow individual recreationists to contribute labor.
    Keywords: Payments for ecosystem services, Recreation, Willingness to pay, Willingness to contribute labor, Contingent valuatio, Community/Rural/Urban Development,
    Date: 2014–08
  16. By: Vlaeminck, Pieter; Vandoren, Jana; Vranken, Liesbet
    Abstract: While consumers are increasingly interested in the ethical characteristics of food products, market shares of these products remains low. So far, not much research has been directed towards the efficacy of labels. Using incentive compatible stated choice experiments in a natural consumer environment, we show that dispersion exists between the explicit value of a fair trade label and the implicit values attached to the underlying characteristics of the label. Our findings thus imply that linking the fair trade label closer with peoples’ values provides opportunities to expand the fair trade market.
    Keywords: Fairtrade labels, Choice Experiments, WTP for fair trade labels and underlying fair trade characterisics, Food Consumption/Nutrition/Food Safety,
    Date: 2014–08
  17. By: Walke, Maria; Mtimet, Nadhem; Baker, Derek; Lindahl, Johanna; Hartmann, Monika; Grace, Delia
    Abstract: Aflatoxin is a human health threat concern in many developing countries. This study examines Kenyan milk consumers’ behaviour toward aflatoxin by way of choice experiments. Further, willingness to pay for different types of milk and aflatoxin status awareness were assessed. Four attributes were selected to describe milk products: smell, colour, price and aflatoxin-free certification. Results indicate that awareness of aflatoxin is relatively high, and that consumers are willing to pay a significant premium for milk that is certified as aflatoxin-free. Results also show, however, that the substantial majority does not know how to avoid aflatoxin-contaminated milk. The results indicate a great need for further education and awareness-raising programs throughout the Kenyan dairy value chain, and a potential for market-based solutions to aflatoxin control in milk.
    Keywords: Milk consumers, Aflatoxin, Kenya, Best-Worst Analysis, Willingness to Pay, Consumer/Household Economics,
    Date: 2014–08

This nep-dcm issue is ©2015 by Edoardo Marcucci. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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