nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2015‒10‒10
ten papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Prosumer Preferences Regarding the Adoption of Micro‐Generation Technologies: Empirical Evidence for German Homeowners By Oberst, Christian; Madlener, Reinhard
  2. Identification of Counterfactuals and Payoffs in Dynamic Discrete Choice with an Application to Land Use By Kalouptsidi, Myrtho; Scott, Paul; Souza-Rodrigues, Edouardo
  3. Manipulating a stated choice experiment By Fosgerau, Mogens; Börjesson, Maria
  4. Retail Market Power in a Shopping Basket Model of Supermarket Competition By Timothy Richards; Stephen Hamilton; Koichi Yonezawa
  5. Should historic sites protection be targeted at the most famous? Evidence from a contingent valuation in Scotland. By Laure Kuhfuss; Nick Hanley; Russell Whyte
  6. Incremental willingness to pay By Lamiraud, Karine; Oxoby, Robert; Donaldson, Cam
  7. Welfare Evaluation of the 1986 Tax Reform for Married Couples in the United States By Picchio, Matteo; Valletta, Giacomo
  8. cquad: An R and Stata Package for Conditional Maximum Likelihood Estimation of Dynamic Binary Panel Data Models By Bartolucci, Francesco; Pigini, Claudia
  9. The Economic Value of Mountain Biking in the Baviaanskloof Mega Reserve, Eastern Cape, South Africa: A Travel Cost Analysis Using Count Data Models By Mario Du Preez and Deborah Ellen Lee
  10. The effects of employment profile on travel motivation and destination attributes in South Africa By Sandra Perks; Danie Ferreira; Nadine Oosthuizen

  1. By: Oberst, Christian (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: This paper investigates the preferences of homeowners in Germany regarding the adoption of renewable energy‐based micro‐generation technologies using data from a survey with a discrete choice experiment. In the German policy debate, private households, in their possible joint roles as electricity producers and consumers, are discussed as potential key actors for the transition of the energy system towards a decentralized energy market based on renewable energies. In our study, we address the relevance of investment and usage characteristics as well as the perceived importance of both private and social costs and benefits behind prosumer preferences for the adoption of generic electricity micro‐generation technologies. The empirical investigation is based on a conditional logit model. The results show the perceived usefulness of electricity self‐supply, indicating that the motivation for electricity "prosuming" is about more than just using green electricity and undertaking a profitable (energy) investment. Policy makers should not rely on the intrinsic motivation of households to contribute towards climate protection but instead take social effects more strongly into account in their policies which aim to foster the energy system transition (“Energiewende”). Further, both energy policies and business models should avoid the introduction of overly complex measures which might be too demanding on households.
    Keywords: Prosumer; micro‐generation technologies; choice experiment; renewable energy; energy transition; policy
    JEL: C25 D12 O33 Q20
    Date: 2015–09
  2. By: Kalouptsidi, Myrtho; Scott, Paul; Souza-Rodrigues, Edouardo
    Abstract: Dynamic discrete choice models are non-parametrically not identified without restrictions on payoff functions, yet counterfactuals may be identified even when payoffs are not. We provide necessary and sufficient conditions for the identification of a wide range of counterfactuals for models with nonparametric payoffs, as well as for commonly used parametric functions, and we obtain both positive and negative results. We show that access to extra data of asset resale prices (when applicable) can solve non-identifiability of both payoffs and counterfactuals. The theoretical findings are illustrated empirically in the context of agricultural land use. First, we provide identification results for models with unobserved market-level state variables. Then, using a unique spatial dataset of land use choices and land resale prices, we estimate the model and investigate two policy counterfactuals: long run land use elasticity (identified) and a fertilizer tax (not identified, affected dramatically by restrictions).
    Keywords: Identification, Dynamic Discrete Choice, Counterfactual, Land Use
    Date: 2015–08
  3. By: Fosgerau, Mogens; Börjesson, Maria
    Abstract: This paper considers the design of a stated choice experiment intended to measure the marginal rate of substitution (MRS) between cost and an attribute such as time using a conventional logit model. Focusing the experimental design on some target MRS will bias estimates towards that value. The paper shows why this happens. The resulting estimated MRS can then be manipulated by adapting the target MRS in the experimental design.
    Keywords: stated choice; willingness to pay; misspecification; experimental design
    JEL: C9 D10 Q51
    Date: 2015
  4. By: Timothy Richards (Arizona State University); Stephen Hamilton (Department of Economics, California Polytechnic State University); Koichi Yonezawa (Technical University of Munich)
    Abstract: Supermarket consumers typically purchase more than one item ata time. Modeling demand relationship among items in consumers' shopping baskets is therfore essential to understanding how retailers set prices. To date, models of price competition among retailers typically assume consumers make discrete choices among categories in the store or derive utility from independent goods that is unaffected by basket composition. In this paper, we develop a model of price competition among items in consumer shopping baskets. We derive inferences for market power under complementary categories and compare outcomes with the prediction of models that assume discrete choice among independent categories. We show that complementarity generates substantially greater pricing power for retailers than independent goods, resulting in less competitive behavior.
  5. By: Laure Kuhfuss (Department of Geography and Sustainable Development, University of St. Andrews); Nick Hanley (Department of Geography and Sustainable Development, University of St. Andrews); Russell Whyte (Historic Environment Scotland, Scotland, UK)
    Abstract: We used a contingent valuation survey of a random sample of the general public living in Scotland to estimate how willingness to pay (WTP) for the conservation of historic sites (such as castles and stone circles) varies with how well-known these sites are and whether people have visited them. Each respondent was asked to state a maximum WTP in terms of higher income taxes for the conservation of two sites, one of which was “famous” and one of which was less well-known. The hypothetical scenario involved payment to avoid future damage to each site. When observable differences in respondent characteristics are controlled for, we found no significant differences in mean WTP across sites. However, a significant effect was found for respondent familiarity with each site (in terms of recognising it on a photograph), with sites which respondents were more familiar with attracting higher WTP values. Distance effects on WTP were mixed: significant effects of distance of the site from respondents’ homes were only found for the less well-known sites, but not for famous sites. The main conclusions of the study were that (i) the Scottish general public are willing to pay for the conservation of historic sites and that (ii) such values exist as much for less-well known sites as for famous sites. This implies that public funds should not be allocated solely to conservation of the best-known sites.
    Keywords: contingent valuation; historic site; willingness to pay
    JEL: Q51 Q58
    Date: 2015–10
  6. By: Lamiraud, Karine (ESSEC Business School); Oxoby, Robert (University of Calgary, Department of Economics); Donaldson, Cam (Glasgow Caledonian University, Yunus Centre for Social Business & Health)
    Abstract: Applications of willingness to pay (WTP) have shown the difficultly to discriminate between various options. This reflects the problem of embedding in both its specific sense, of options being nested within one another, and its more-general sense, whereby respondents cannot discriminate between close substitutes or between more-disparate rivals for the same budget. Furthermore, high proportions of reversals between WTP-value and simple preference based rankings of options are often highlighted. Although an incremental WTP approach was devised to encourage more differentiated answers and a higher degree of consistency among respondents, a theoretical basis for this approach has not been elucidated, and there is little evidence to show that this approach might indeed achieve greater consistency between explicit and implicit rankings inferred from WTP values. We address both these issues. Following our theoretical exposition, standard and incremental approaches were compared with explicit ranking in a study assessing preferences for different French emergency care services. 280 persons, representative of the French adult population, were interviewed. Half received the incremental version, the other half the standard version. Results suggest that the incremental approach provides a ranking of options fully in line with explicit ranking. The standard approach was reasonably consistent with explicit ranking but proved unable to differentiate between the five most preferred providers, as predicted by theory. Our findings suggest that the incremental approach provides results which can be used in priority-setting contexts.
    Keywords: WTP; contingent valuation; reference points; embedding effect; incremental approach; emergency care
    JEL: D60 H40 I10
    Date: 2015–09
  7. By: Picchio, Matteo (Università Politecnica delle Marche, Ancona); Valletta, Giacomo (Maastricht University)
    Abstract: This paper evaluates the welfare effects of the 1986 Tax Reform Act (TRA86). In thirty years since its introduction, several studies have analysed the effects of TRA86. However, preference heterogeneity and non-market dimensions of welfare have not been taken into account. We propose an evaluation of the impact of TRA86 on well-being using different welfare metrics which fully retain preference heterogeneity. We estimate utility functions with preference heterogeneity on the basis of structural models of family labor supply. Then, by way of these estimated preferences, we compute several welfare rankings corresponding to different ethical priors. Finally, we identify the losers and the winners of TRA86 under different ethical priors.
    Keywords: welfare measures, tax reform, preference heterogeneity, discrete model, labor supply
    JEL: C25 D63 H22 H31 J22
    Date: 2015–09
  8. By: Bartolucci, Francesco; Pigini, Claudia
    Abstract: We illustrate R package cquad for conditional maximum likelihood estimation of the quadratic exponential (QE) model proposed by Bartolucci and Nigro (2010) for the analysis of binary panel data. The package also allows us to estimate certain modified versions of the QE model, which are based on alternative parametrizations, and it includes a function for the pseudo conditional likelihood estimation of the dynamic logit model, as proposed by Bartolucci and Nigro (2012). We also illustrate a reduced version of this package that is available in Stata. The use of the main functions of this package is based on examples using labor market data.
    Keywords: dynamic logit model, pseudo maximum likelihood estimation, quadratic exponential model, state-dependence
    JEL: C13 C23 C51
    Date: 2015–10–02
  9. By: Mario Du Preez and Deborah Ellen Lee
    Abstract: This paper reports the first formal non-market valuation of mountain biking in South Africa by applying the individual travel cost method (TCM). Due to the non-negative, integer nature of the trip data, several count data models were estimated. Mountain biking is fast becoming one of South Africa’s most popular recreational sports and these estimates of economic value may assist policy-makers in managing mountain biking venues in general, and congestion conflicts, specifically. The locus of this study is the Baviaanskloof Mega-Reserve situated in the Eastern Cape Province of South Africa, part of which was declared a World Heritage Site in 2004. The reserve is a popular site for mountain biking. The economic value estimated, by employing a generalised negative binomial model, for trips taken during 2014 amounted to ZAR1 915 (US$167) per trip.
    Keywords: Travel cost method, recreation demand, mountain biking, non-market valuation, consumer surplus
    Date: 2015
  10. By: Sandra Perks (Nelson Mandela Metropolitan University); Danie Ferreira (Nelson Mandela Metropole University); Nadine Oosthuizen (Nelson Mandela Metropole University)
    Abstract: Purpose of the study: This study investigated the effects of employment profile on travel motivation and destination attributes in the South African outbound travel market. Research design and methodology: The study utilised the quantitative research paradigm. A self-administered structured questionnaire was distributed to travellers who have finished high school and have at least travelled once internationally. A response rate of 302 respondents was obtained. A literature review were carried out on the role of motivational forces and destination attributes in attracting tourists to an outbound destination. From the literature review, twenty seven hypotheses were developed to test the relationships between the nine valid and reliable independent motivational forces, destination attributes and the employment profile (independent classification variables). Employment profile was measured in terms of employment status, position in the organisation and income earned. Multiple Analysis of Variance tests determine whether the employment profile of South Africans are influenced by motivational forces and destination choice attributes when choosing an outbound destination choice. Post-hoc Sheffé tests were conducted to determine where the group differences exist in the statistical significant relationships and Cohen D tests to indicate which relationships were of practical significance. Research findings: The MANOVA results reveal six statistical significant relationships between: employment status and physical motivators, stature motivators, events and political issues; position in organisation and events; and income earned and natural attractions. From the post-hoc Sheffé test results, group differences were noted for employment status with regards to events and natural attractions, position in organisation and events, as well as income earned and natural attractions. Taking into consideration these group differences, the Cohen D tests revealed three practical significant results. Research implications: There may be other travel motivators and destination attributes that influence the South African outbound travel market besides those tested. The results of the study was only limited to Nelson Mandela Bay in the Eastern Cape.Practical implications: The results provide advice to travel agents on marketing destinations and indicate which tourism products will appeal to them based on employment status, position in organisation and income earned. Contribution of paper: This paper contributes towards the body of knowledge with regards to outbound destination choices based on employment profile of the potential tourist, which have wider implications than just in the South African context.
    Keywords: Travel motivation; destination attributes; outbound travel
    JEL: M00

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.