nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2015‒04‒25
25 papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Commuters' Preferences for Fast and Reliable Travel By Paul Koster; Hans Koster
  2. Testing preference formation in learning design contingent valuation (LDCV) using advanced information and repetitivetreatments By Aravena, Claudia; Hutchinson, W. George; Carlsson, Fredrik; Matthews, David I
  3. Bayesian D-Optimal Choice Designs for Mixtures By Aiste Ruseckaite; Peter Goos; Dennis Fok
  4. The Influence of Environmental Concerns on Drivers’ Preferences for Electric Cars By Alexandros Dimitropoulos
  5. Crowding Externalities from Tourist Use of Urban Space By Bart Neuts; Peter Nijkamp; Eveline van Leeuwen
  6. Changing with the Tide: Semi-Parametric Estimation of Preference Dynamics By Thijs Dekker; Paul Koster; Roy Brouwer
  7. What Clients want: Choices between Lawyers' Offerings By Flora Felso; Sander Onderstal; Jo Seldeslachts
  8. Cultural Heritage and the Attractiveness of Cities: Evidence from Recreation Trips By Ruben van Loon; Tom Gosens; Jan Rouwendal
  9. Mixed Density based Copula Likelihood By Kazim Azam; Andre Lucas
  10. Market Structure and the Pricing of New Products: A Nested Logit Approach with Asymmetric Firms By Sylvia Bleker; Christiaan Behrens; Paul Koster; Erik T. Verhoef
  11. Adoption of Electric Vehicle in the Netherlands – A Stated Choice Experiment By M. Bockarjova; P. Rietveld; J.S.A. Knockaert
  12. Location Choices of highly Educated Foreign Workers: the Importance of Urban Amenities By Or Levkovich; Jan Rouwendal
  13. Door-to-Door Travel Times in RP Departure Time Choice Models: An Approximation Method based on GPS By Stefanie Peer; Jasper Knockaert; Paul Koster; Yin-Yen Tseng; Erik Verhoef
  14. Thought for Food: Understanding Educational Disparities in Food Consumption By Hale Koç; Hans van Kippersluis
  15. Probabilistic Choice and Congestion Pricing with Heterogeneous Travellers and Price-Sensitive Demand By Paul Koster; Erik T. Verhoef; Simon Shepherd; David Watling
  16. Overreporting vs. Overreacting: Commuters' Perceptions of Travel Times By Stefanie Peer; Jasper Knockaert; Paul Koster; Erik Verhoef
  17. Welfare Effects of Distortionary Tax Incentives under Preference Heterogeneity: An Application to Employer-provided Electric Cars By Alexandros Dimitropoulos; Jos N. van Ommeren; Paul Koster; Piet Rietveld†
  18. Stochastic User Equilibrium Traffic Assignment with Price-sensitive Demand: Do Methods matter (much)? By Adriaan Hendrik van der Weijde; Vincent A.C. van den Berg
  19. Residents’ Appreciation of Cultural Heritage in Tourist Centres - A Micro-simulation Modelling Approach to Amsterdam By Eveline van Leeuwen; Karima Kourtit; Peter Nijkamp
  20. Crime, Employment and Social Welfare: an Individual-level Study on Disadvantaged Males By Geert Mesters; Victor van der Geest; Catrien Bijleveld
  21. Cultural Diversity and Cultural Distance as Choice Determinants of Migration Destination By Zhiling Wang; Thomas de Graaff; Peter Nijkamp
  22. Will Choice Hurt? Compared to What? School Choice Experiment in Estonia By Kaire Põder; Triin Lauri
  23. Intraday Stock Price Dependence using Dynamic Discrete Copula Distributions By Siem Jan Koopman; Rutger Lit; André Lucas
  24. Sensitive survey questions: measuring attitudes regarding female circumcision through a list experiment By De Cao, Elisabetta; Lutz, Clemens
  25. Innovate or imitate? Behavioural Technological Change By Cars Hommes; Paolo Zeppini

  1. By: Paul Koster (VU University Amsterdam); Hans Koster (VU University Amsterdam)
    Abstract: We employ a semi-parametric estimation approach to analyse observed and unobserved heterogeneity in the value of travel time and schedule delay. Our econometric approach allows for the estimation of unobserved and observed heterogeneity in preferences in a flexible way, meaning that we do not put any structure on how individual characteristics (such as income and age) relate to values of time and schedule delay. Using data from a stated choice experiment, we illustrate the estimation approach and find that there is substantial heterogeneity in the willingness to pay for reductions in travel time and schedule delay. For our data, unobserved heterogeneity is more important than heterogeneity related to individual characteristics.
    Keywords: local maximum likelihood, heterogeneity, scheduling, semiparametric Logit, latent class, normalised entropy criterion, value of time, value of reliability
    JEL: R4 C14 C23
    Date: 2013–05–28
  2. By: Aravena, Claudia (Queen's University Belfast); Hutchinson, W. George (Queen's University Belfast); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Matthews, David I (Queen's University Belfast)
    Abstract: Policymakers have largely replaced Single Bounded Discrete Choice (SBDC) valuation by the more statistically efficient repetitive methods; Double Bounded Discrete Choice (DBDC) and Discrete Choice Experiments (DCE). Repetitive valuation permits classification into rational preferences: (i) a-priori well-formed; (ii) consistent non-arbitrary values “discovered” through repetition and experience; (Plott, 1996; List 2003) and irrational preferences; (iii) consistent but arbitrary values as “shaped” by preceding bid level (Tufano, 2010; Ariely et al., 2003) and (iv) inconsistent and arbitrary values. Policy valuations should demonstrate behaviorally rational preferences. We outline novel methods for testing this in DBDC applied to renewable energy premiums in Chile.<p>
    Keywords: Contingent valuation; double bounded discrete choice; repetitive learning; advanced information learning; bid dependency; theories of preference formation
    JEL: D03 Q40 Q51
    Date: 2015–04
  3. By: Aiste Ruseckaite (Erasmus University Rotterdam); Peter Goos (Universiteit Antwerpen, Belgium); Dennis Fok (Erasmus University Rotterdam)
    Abstract: Consumer products and services can often be described as mixtures of ingredients. Examples are the mixture of ingredients in a cocktail and the mixture of different components of waiting time (e.g., in-vehicle and out-of-vehicle travel time) in a transportation setting. Choice experiments may help to determine how the respondents' choice of a product or service is affected by the combination of ingredients. In such studies, individuals are confronted with sets of hypothetical products or services and they are asked to choose the most preferred product or service from each set. However, there are no studies on the optimal design of choice experiments involving mixtures. We propose a method for generating an optimal design for such choice experiments. To this end, we first introduce mixture models in the choice context and next present an algorithm to construct optimal experimental designs, assuming the multinomial logit model is used to analyze the choice data. To overcome the problem that the optimal designs depend on the unknown parameter values, we adopt a Bayesian D-optimal design approach. We also consider locally D-optimal designs and compare the performance of the resulting designs to those produced by a utility-neutral (UN) approach in which designs are based on the assumption that individuals are indifferent between all choice alternatives. We demonstrate that our designs are quite different and in general perform better than the UN designs.
    Keywords: Bayesian design, Choice experiments, D-optimality, Experimental design, Mixture coordinate-exchange algorithm, Mixture experiment, Multinomial logit model, Optimal design
    JEL: C01 C10 C25 C61 C83 C90 C99
    Date: 2014–05–09
  4. 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
  5. By: Bart Neuts (KU Leuven, Belgium); Peter Nijkamp (VU University Amsterdam); Eveline van Leeuwen (VU University Amsterdam)
    Abstract: Popular urban tourist destinations are attracting large numbers of both overnight visitors and excursionists. Since urban cities perform a multitude of functions, the space requirements of tourists can, at times, interfere with those of local users. This paper addresses the issue of disutilities of space congestion through a dichotomous choice experiment model in order to offer a monetary valuation of tourist crowding in urban public space. A resident survey was carried out in the city of Amsterdam in order to estimate a random parameter logit model through which the residents’ willingness to pay to avoid unfavourable crowding situations can be assessed. Their willingness to pay in order to increase the use levels by visitors in the Dam area from ‘not at all crowded’ or ‘not crowded’ to ‘crowded’ was respectively €1.36 and €0.83 annually, while the mean willingness to pay for a decline in the use level from ‘very crowded’ to ‘crowded’ was estimated to be €11.06 a year. While tourism is only partly responsible for these crowding levels, the results demonstrate that the social effects of tourist consumption can be positive as well as negative, depending on the existing use level and attitudinal perceptions of residents.
    Keywords: public space, crowding, externalities, choice experiments, tourism, willingness to pay
    JEL: P25
    Date: 2013–09–20
  6. By: Thijs Dekker (Delft University of Technology); Paul Koster (VU University Amsterdam); Roy Brouwer (VU University Amsterdam)
    Abstract: This discussion paper resulted in a publication in <I>Land Economics</I> (2014). Volume 90(4), pages 717-745.<P> This paper contrasts the discovered preference hypothesis against the theory of coherent arbitrariness in a split-sample stated choice experiment on flood risk exposure in the Netherlands. A semi-parametric local multinomial logit model (L-MNL) is developed as an alternative to the Swait and Louviere (1993) procedure to control for preference dynamics within and between samples. The L-MNL model finds empirical support for the discovered preference hypothesis in the form of a declining starting point bias induced by the first choice task. These results differ from the Swait and Louviere procedure which, due to its limited flexibility, accepts the standard assumption underlying microeconomic theory of stable preference parameters throughout the choice sequence. The observed preference dynamics puts the use of choice experiments at risk of generating biased welfare estimates if not controlled for.
    Keywords: Preference dynamics; Discovered preference hypothesis; Coherent arbitrariness; Preference uncertainty; Local multinomial logit model
    JEL: C14 D12 Q51 Q54
    Date: 2013–05–27
  7. By: Flora Felso (Netherlands Bureau for Economic Policy Analysis (CPB), the Netherlands); Sander Onderstal (University of Amsterdam); Jo Seldeslachts (University of Amsterdam)
    Abstract: We analyze a client's choice of contract in auctions where Dutch law firms compete for routine cases. The distinguishing feature here is that lawyers may submit bids with any fee arrangement they prefer: an hourly rate, a fixed fee or a mixed fee, which is a time-capped fixed fee plus an hourly rate for any additional hours should the case take longer than expected. Furthermore, this format of selling legal services is unusual in that it both forces lawyers to compete directly against each other and allows clients to easily compare these different offers. We empirically estimate a choice model for clients and find robust evidence that hourly rate bids are a client's least-preferred choice. Our findings tentatively contradict lawyers' often made argument that hourly rates are in a client's best interest.
    Keywords: Lawyers' fee arrangements, clients' choices, discrete choice models
    JEL: C25 D43 K10 K40
    Date: 2014–02–10
  8. 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
  9. By: Kazim Azam (VU University Amsterdam); Andre Lucas (VU University Amsterdam)
    Abstract: We consider a new copula method for mixed marginals of discrete and continuous random variables. Unlike the Bayesian methods in the literature, we use maximum likelihood estimation based on closed-form copula functions. We show with a simulation that our methodology performs similar to the method of Hoff (2007) for mixed data, but is considerably simpler to estimate. We extend to a time series setting, where the parameters are allowed to vary over time. In an empirical application using data from the 2013 Household Finance Survey, we show how the copula dependence between income (continuous) and discrete household characteristics varies across groups who were affected differently by the recent economic crisis.
    Keywords: copula, discrete data, time series
    JEL: C32 C35
    Date: 2015–01–08
  10. By: Sylvia Bleker (VU University Amsterdam, the Netherlands); Christiaan Behrens (VU University Amsterdam, the Netherlands); Paul Koster (VU University Amsterdam, the Netherlands); Erik T. Verhoef (VU University Amsterdam, the Netherlands)
    Abstract: This article investigates competition in a market with an emerging technology using a discrete choice model to analyze demand and welfare. We focus on industry structure and investigate the impact of different market structures on demand for the new technology and on welfare. The car market serves as a prime example of such a market, where electric vehicles (EV’s) represent the new technology competing with standard cars with internal combustion engines (ICV’s). To analyze such a market, we use a nested logit model. In contrast to earlier literature, we allow firms to be asymmetric and active in multiple nests, with different numbers of variants in each nest, which can add up to any market share. Additionally, we add to existing literature by considering the case where substitutability between firms is stronger than between technologies, by nesting products by technology instead of by firm. We find implicit analytical solutions for the equilibrium mark-ups which can be used when there are two nests in the market; within that restriction firms can be asymmetric. Numerically, we find that EV sales are higher if offered by a new entrant only selling EV’s as opposed to when it is supplied by a firm selling variants of both types. We present an index based on mark-up differences between variants in the market, which can be used to a priori determine whether a change in market structure would increase or decrease welfare. These results are general to the nested logit model, and the index can thus be used in any market, as long as the market is sufficiently accurately described by the nested logit model.
    Keywords: Nested logit model, asymmetry, market structure, welfare indices, emerging technology
    JEL: D43 D60 L11 L91
    Date: 2014–10–28
  11. By: M. Bockarjova (VU University Amsterdam); P. Rietveld (VU University Amsterdam); J.S.A. Knockaert (VU University Amsterdam)
    Abstract: In this paper, we apply a dynamic innovation diffusion framework to model adoption of full electric vehicles where we explicitly distinguish three major phases of adoption: introduction, growth and maturity. We combine this approach with an SP study to elicit individual preferences for conventional, hybrid and full electric vehicles. We apply a nested logit model to estimate the preferences for EVs based on the total costs of ownership approach that includes monetary and non-monetary costs of owing a vehicle. With negative estimates of WTP for hybrid vehicles (of about €900 on a yearly basis), our results suggest abolishment of subsidization of hybrid vehicles as they potentially crowd out EV adoption. Besides, EVs need to be subsidized on average at €2,000 per year, and this amount is decreasing in the process of vehicle adoption. Time costs associated with rapid charging are a substantial hindrance to EV adoption with average value of time of €63 per hour, increasing for each subsequent consumer segment from €48 to €122 per hour. Environmental costs of CO2 reductions are valued far above the market average at €160 per ton, but determine EV choices only at a later stage of adoption. Finally, towing potential is valued on average at €540 per year and it is about the same for all consumer segments throughout the adoption phases. Policy implications are discussed involving a mix of structural and monetary incentives.
    Keywords: stated preferences, revealed preferences, non-monetary costs, innovation
    JEL: C01 C33 D12 D49 D91 R41
    Date: 2013–07–30
  12. By: Or Levkovich; Jan Rouwendal (VU University Amsterdam)
    Abstract: In the globalized economy the presence of migrants is essential for urban and regional growth, and it is therefore important to know what makes a city an attractive place for highly skilled migrants. This paper aims to shed light on this issue by considering the location choice of highly-educated foreign workers, and if and how their valuation of urban amenities differs from domestic workers. To do so, we apply a residential location-choice model to estimate the attractiveness of residential locations in the Dutch Randstad for low and high-skilled, domestic and foreign workers, and calculate and compare their willingness to pay for each of these amenities.
    Keywords: urban amenities, foreign workers
    JEL: R53 R11
    Date: 2014–07–22
  13. By: Stefanie Peer (VU University Amsterdam); Jasper Knockaert (VU University Amsterdam); Paul Koster (VU University Amsterdam); Yin-Yen Tseng (VU University Amsterdam); Erik Verhoef (VU University Amsterdam)
    Abstract: A common way to determine values of travel time and schedule delay is to estimate departure time choice models, using stated preference (SP) or revealed preference (RP) data. The latter are used less frequently, mainly because of the difficulties to collect the data required for the model estimation. One main requirement is knowledge of the (expected) travel times for both chosen and unchosen departure time alternatives. As the availability of such data is limited, most RP-based scheduling models only take into account travel times on trip segments rather than door-to-door travel times, or use very rough measures of door-to-door travel times. We show that ignoring the temporal and spatial variation of travel times, and, in particular, the correlation of travel times across links may lead to biased estimates of the value of time (VOT). To approximate door-to-door travel times for which no complete measurement is possible, we develop a method that relates travel times on links with continuous speed measurements to travel times on links where relatively infrequent GPS-based speed measurements are available. We use geographically weighted regression to estimate the location-specific relation between the speeds on these two types of links, which is then used for travel time prediction at different locations, days, and times of the day. This method is not only useful for the approximation of door-to-door travel times in departure time choice models, but is generally relevant for predicting travel times in situations where continuous speed measurements can be enriched with GPS data.
    Keywords: Valuation of travel time and schedule delays, door-to-door travel times, departure time choice, revealed preference (RP) data, door-to-door travel times, geographically weighted regression (GWR), GPS data,
    JEL: C14 C25 R48
    Date: 2011–12–22
  14. By: Hale Koç (Erasmus School of Economics, Erasmus University Rotterdam); Hans van Kippersluis (Erasmus School of Economics, Erasmus University Rotterdam)
    Abstract: Higher educated individuals are healthier and live longer than their lower educated peers. One reason is that lower educated individuals engage more in unhealthy behaviours including consumption of a poor diet, but it is not clear why they do so. In this paper we develop an economic theory of unhealthy food choice, and use a Discrete Choice Experiment to discriminate between the theoretical parameters. Differences in health knowledge appear to be responsible for the greatest part of the education disparity in diet. However, when faced with the most explicit health information regarding diet, lower educated individuals still state choices that imply a lower concern for negative health consequences. This is consistent with a theoretical prediction that part of the education differences across health behaviours is driven by the "marginal value of health" rising with education.
    Keywords: Health, Education, Diet, Discrete Choice Experiment
    JEL: C25 I12 I24
    Date: 2015–03–13
  15. By: Paul Koster; Erik T. Verhoef (VU University Amsterdam, the Netherlands); Simon Shepherd; David Watling (University of Leeds, United Kingdom)
    Abstract: This paper deals with first-best and second-best congestion pricing of a stylised two-link network with probabilistic route choice of travellers. Travellers may have heterogeneous values of travel times and may differ in their idiosyncratic route preferences. We derive first-best and second-best tolls taking into account how the overall network demand responds to generalized costs including the tolls that are levied. We show that with homogeneous values of times the welfare losses of second-best pricing, of one link only, may be smaller if route choice is probabilistic. Furthermore, we show that with heterogeneous values of times, common second-best tolls and group-differentiated tolls can be very close when route choice is governed by random utility maximisation, leading to low welfare losses from the inability to differentiate tolls.
    Keywords: Stochastic User Equilibrium, Second-best Congestion Pricing, Preference Heterogeneity, Scale Heterogeneity, Probabilistic Choice
    JEL: R40 R41 R48
    Date: 2014–06–27
  16. By: Stefanie Peer (VU University Amsterdam, and Institute for the Environment and Regional Development, Vienna University of Economics and Business, Austria); Jasper Knockaert (VU University Amsterdam); Paul Koster (VU University Amsterdam); Erik Verhoef (VU University Amsterdam)
    Abstract: We asked participants of a large-scale, real-life peak avoidance experiment to provide estimates of their average in-vehicle travel time for their morning commute. Comparing these reported travel times to the corresponding actual travel times, we find that travel times are overstated by a factor of 1.5 on average. We show that driver- and link-specic characteristics partially explain the overstating. Using stated and revealed preference data, we investigate whether the driverspecific reporting errors are consistent with the drivers' scheduling behavior in reality as well as in hypothetical choice experiments. For neither case, we find robust evidence that drivers behave as if they misperceived travel times to a similar extent as they misreported them, implying that reported travel times do neither represent actual nor perceived travel times truthfully. The results presented in this paper are thus a strong caveat against the uncritical use of reported travel time data in transport research and policy.
    Keywords: travel time perception, reported travel times, valuation of travel time, departure time choices, peak avoidance experiment, panel latent class models, revealed preference (RP) data
    JEL: C25 D83 D84 R41
    Date: 2013–08–26
  17. By: Alexandros Dimitropoulos; Jos N. van Ommeren; Paul Koster; Piet Rietveld† (VU University Amsterdam)
    Abstract: This paper presents an approach for the estimation of welfare effects of tax policy changes under heterogeneity in consumer preferences. The approach is applied to evaluate the welfare effects of current tax advantages for electric vehicles supplied as fringe benefits by employers. Drawing on stated preferences of Dutch company car drivers, we assess the short-run welfare effects of changes in the taxation of the private use of these vehicles. We find that the welfare gain of a marginal increase in the taxation of electric company cars is substantial and even outweighs the marginal tax revenue raised.
    Keywords: Social welfare, Latent class, Stated preference, Company car, Electric vehicle, Plug-in hybrid
    JEL: D12 H23 H24 H31 O33 Q58 R41
    Date: 2014–06–02
  18. By: Adriaan Hendrik van der Weijde (VU University Amsterdam); Vincent A.C. van den Berg (VU University Amsterdam)
    Abstract: We compare three stochastic user equilibrium traffic assignment models multinomial probit, nested logit, and generalized nested logit), using a congestible transport network. We test the models in two situations: one in which they have theoretically equivalent coefficients, and one in which they are calibrated to have similar traffic flows. In each case, we examine the differences in traffic flows between the SUE models, and use them to evaluate policy decisions, such as profit-maximizing tolling or second-best socially optimal tolling. We then investigate how the optimal tolls, and their performance, depend on the model choice, and hence, how important the differences between models are. We show that the differences between models are small, as a result of the congestibility of the network, and that a better calibration does not always lead to better traffic flow predictions. As the outcomes are so similar, it may be better to use computationally more efficient logit models instead of probit models, in at least some applications, even if the latter is preferable from a conceptual viewpoint.
    Keywords: stochastic user equilibrium, traffic assignment, probit, generalized nested logit, tolling
    JEL: C63 R41 R48
    Date: 2013–12–20
  19. By: Eveline van Leeuwen (VU University Amsterdam); Karima Kourtit (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam)
    Abstract: This paper addresses the question of the value attached by residents of tourist places to the wealth of cultural heritage in their city. Particular attention is given to the impact of various types of information (ranging from traditional to advanced ICT sources) on the residents’ valuation of cultural heritage. Based on an extensive survey among inhabitants of Amsterdam, a two-stage analytical approach is adopted: (i) an econometric (ordered logit) modelling approach to identify the most prominent vectors of the residents’ appreciation of cultural heritage; (ii) a micro-simulation modelling approach to generate a comprehensive picture of the value set of inhabitants regarding the cultural heritage in their city. This information may also serve as a basis for urban strategies on tourism policy, cultural heritage planning and information services management.
    Keywords: Cultural Heritage, Residents, Tourism, Ordered Logit Model, Microsimulation, ICT, Amsterdam
    JEL: L83
    Date: 2013–08–01
  20. By: Geert Mesters; Victor van der Geest; Catrien Bijleveld (VU University Amsterdam)
    Abstract: We test economic and sociological theories for the relationship between employment and crime, where social welfare is used as an identifying mechanism. We consider a sample of disadvantaged males from The Netherlands who are observed between ages 18 and 32 on a monthly time scale. We simultaneously model the offending, employment and social welfare variables using a dynamic discrete choice model, where we allow for state dependence, reciprocal effects and time-varying unobserved heterogeneity. We find significant negative bi-directional structural effects between employment and property crime. Robustness checks show that only regular employment is able to significantly reduce the offending probability. Further, a significant uni-directional effect is found for the public assistance category of social welfare on property offending. The results highlight the importance of economic incentives for explaining the relationship between employment and crime for disadvantaged individuals. For these individuals the crime reducing effects from the public assistance category of social welfare equivalent to those from employment, which suggests the importance of financial gains. Further, the results suggest that stigmatizing effects from offending reduce the future employment probability.
    Keywords: dynamic discrete choice, strain, social control, state dependence, reciprocal, unobserved heterogeneity
    JEL: K42 C32 C33
    Date: 2014–07–22
  21. By: Zhiling Wang; Thomas de Graaff; Peter Nijkamp (VU University Amsterdam)
    Abstract: This study analyses the impact of cultural composition on regional attractiveness from the perspective of migrant sorting behaviour. We use an attitudinal survey to quantify cultural distances between natives and immigrants in the area concerned, and estimate the migrants’ varying preferences for both cultural diversity and cultural distance. To account for regional unobserved heterogeneity, our econometric analysis employs artificial instrumental variables, as developed by Bayer et al. (2004). The main conclusions are twofold. On the one hand, cultural diversity increases regional attractiveness. On the other hand, average cultural distance greatly weakens regional attractiveness, even when the presence of network effect is controlled for.
    Keywords: migration, cultural diversity, cultural distance, destination choice, sorting
    JEL: R2 Z1
    Date: 2014–06–02
  22. By: Kaire Põder (Tallinn University of Technology); Triin Lauri (Tallinn University)
    Abstract: This article presents empirical analysis of the effects of school choice policy in Estonia. We show that relying on market and giving autonomy to the schools over student selection without any central priority matching or other central guidelines will produce admission tests, even in elementary school level. The latter will bring with it intensive prep-schooling. Our contribution is to show that in the current case choice-policy experiment will produce between schools segregation effects based on residential and background characteristics. However, the interpretation of these effects is complex because, when compared with the pre-market, topped-off voucher-based residential choice model, it diminishes segregation based on income and family socio-economic status.
    Date: 2014–01–30
  23. By: Siem Jan Koopman (VU University Amsterdam, the Netherlands); Rutger Lit (VU University Amsterdam, the Netherlands); André Lucas (VU University Amsterdam, the Netherlands)
    Abstract: We investigate the intraday dependence pattern between tick data of stock price changes using a new time-varying model for discrete copulas. We let parameters of both the marginal models and the copula vary over time using an observation driven autoregressive updating scheme based on the score of the conditional probability mass function with respect to the time-varying parameters. We apply the model to high-frequency stock price changes expressed as discrete tick-size multiples for four liquid U.S. financial stocks. Our modeling framework is based on Skellam densities for the marginals and a range of different copula functions. We find evidence of intraday time-variation in the dependence structure. After the opening and before the close of the stock market, dependence levels are lower. We attribute this finding to more idiosyncratic trading at these times. The introduction of score driven dynamics in the dependence structure significantly increases the likelihood values of the time-varying copula model. By contrast, a fixed daily seasonal dependence pattern clearly fits the data less well.
    Keywords: time-varying copulas, dynamic discrete data, score driven models, Skellam distribution, dynamic dependence
    JEL: C32 G11
    Date: 2015–03–19
  24. By: De Cao, Elisabetta; Lutz, Clemens (Groningen University)
    Date: 2014
  25. By: Cars Hommes (CeNDEF, University of Amsterdam); Paolo Zeppini (School of Innovation Sciences, Eindhoven University of Technology)
    Abstract: We propose a behavioural model of technological change with evolutionary switching between boundedly rational costly innovators and free imitators, and study the endogenous interplay of innovation decisions, market price dynamics and technological progress. Innovation and imitation are strategic substitutes and exhibit negative feedback. Endogenous technological change is the cumulative outcome of innovation decisions. There are three scenarios: market breakdown, Schumpeterian rents and learning curves. The latter is characterized by an increasing fraction of innovators when demand is elastic, while inelastic demand allows technological progress with shrinking innovation effort. Model simulations are compared to empirical data of two industrial sectors.
    Keywords: discrete choice, innovation patterns, learning curves, switching behavior
    JEL: C62 C73 D21 O33
    Date: 2013–07–26

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