nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2015‒11‒21
eight papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Marine Trade-Offs: Comparing the Benefits of Off-Shore Wind Farms and Marine Protected Areas By Aljona Karlõševa; Sulev Nõmmann; Tea Nõmmann; Evelin Urbel-Piirsalu; Wiktor Budzinski; Mikolaj Czajkowski; Nick Hanley
  2. Using stated preference methods to assess environmental impacts of forest biomass power plants in Portugal By Anabela Botelho; Lina Sofia Lourenço-Gomes; Lígia Costa Pinto; Sara Sousa; Marieta Valente
  3. Pro-Environmental Households and Energy Efficiency in Spain By Ana Ramos; Xavier Labandeira; Andreas Lšschel
  4. Demand for a Transgenic Food with a Medical Benefit By Saito, Yoko; Saito, Hisamitsu
  5. Transport and Low-carbon. Fuel: A study of Public Preferences in Spain By María L. Loureiro; Xavier Labandeira; Michael Hanemann
  6. Problems of utility and prospect theories. A “certain–uncertain” inconsistency within their experimental methods By Harin, Alexander
  7. Downtown Parking Supply, Work-Trip Mode Choice and Urban Spatial Structure By Sofia F. Franco
  8. Attention and Saliency on the Internet: Evidence from an Online Recommendation System By Helmers, Christian; Krishnan, Pramila; Patnam, Manasa

  1. By: Aljona Karlõševa (Stockholm Environmental Institute, Tallinn, Estonia); Sulev Nõmmann (Stockholm Environmental Institute, Tallinn, Estonia); Tea Nõmmann (Stockholm Environmental Institute, Tallinn, Estonia); Evelin Urbel-Piirsalu (Stockholm Environmental Institute, Tallinn, Estonia); Wiktor Budzinski (University of Warsaw, Department of Economics); Mikolaj Czajkowski (University of Warsaw, Department of Economics); Nick Hanley (Department of Geography and Sustainable Development, University of St. Andrews)
    Abstract: The drive to increase renewable electricity production in many parts of Europe has led to an increasing concentration of new wind energy sites at sea. This results in a range of environmental impacts which should be taken into account in a benefit-cost analysis of such proposals. In this paper, we use choice modelling to investigate the relative gains and losses from siting new windfarms off the coast of Estonia, relative to the option of creating a new marine protected area. We find that, while respondents are generally opposed to converting marine shoals to conventional wind farms and prefer the establishment of marine protected areas instead, benefits from constructing ‘environmentally-friendly’ wind farms – an alternative program which is also considered by the government – are not statistically different with respect to consumers’ welfare to those associated with creating a new marine protected area. Methodologically, the paper makes a contribution by showing the ability of the latent class mixed logit model to represent both within-and between-class preference heterogeneity, and thus its power to provide a more sophisticated representation of preference heterogeneity than stand-alone latent class or mixed logit approaches. The paper is also presents the first use of the latent class mixed logit model in willingness-to-pay space for environmental goods.
    Keywords: Discrete Choice Experiment, Off-Shore Wind Energy, Marine Protected Areas, Willingness to Pay Space, Latent Class Mixed Logit, Renewable Energy
    JEL: Q51 O13 Q56 Q58 Q42 Q48 Q25 Q28
    Date: 2015–11
  2. By: Anabela Botelho (Universidade de Aveiro, GOVCOPP); Lina Sofia Lourenço-Gomes (University of Trás-os-Montes and Alto Douro); Lígia Costa Pinto (Universidade do Minho, NIMA); Sara Sousa (Instituto Politéctnico de Coimbra, ISCAC); Marieta Valente (Universidade do Minho, NIMA)
    Abstract: As a renewable energy source, the use of forest biomass for electricity generation is advantageous in comparison with fossil fuels, however the activity of forest biomass power plants causes adverse impacts, affecting particularly neighbouring communities. The main objective of this study is to estimate the effects of the activity of forest biomass power plants on the welfare of two groups of stakeholders, namely local residents and the general population and we apply two stated preference methods: contingent valuation and discrete choice experiments, respectively. The former method was applied to estimate the minimum compensation residents of neighbouring communities of two forest biomass power plants in Portugal would be willing to accept. The latter method was applied among the general population to estimate their willingness to pay to avoid specific environmental impacts. The results show that the presence of the selected facilities affects individuals’ well-being. On the other hand, in the discrete choice experiments conducted among the general population all impacts considered were significant determinants of respondents’ welfare levels. The results of this study stress the importance of performing an equity analysis of the welfare effects on different groups of stakeholders from the installation of forest biomass power plants, as their effects on welfare are location and impact specific. Policy makers should take into account the views of all stakeholders either directly or indirectly involved when deciding crucial issues regarding the sitting of new forest biomass power plants, in order to achieve an efficient and equitable outcome.
    Keywords: Forest Biomass, Stated Preference Methods, Contingent Valuation, Discrete Choice Experiments, Environmental Impacts, Public Attitudes
    JEL: C90
    Date: 2015–11
  3. By: Ana Ramos (Rede (Universidade de Vigo)); Xavier Labandeira (Rede (Universidade de Vigo) and European University Institute); Andreas Lšschel (WestfŠlische Wilhelms-University MŸnster and Centre for European Economic Research (ZEW))
    Abstract: The residential building sector is a major driver of current and future energy consumption and associated emissions, which can be potentially mitigated through significant energy-efficiency (EE) improvements in both emerging and developed countries. Yet, there are several persistent barriers that hinder the attainment of EE improvements in this area. Using data from a 2008 national representative survey of Spanish households, this paper is interested in the determinants of EErelated decisions. In particular, a discrete-choice model empirically analyzes whether pro-environmental households are more likely to invest in EE and to adopt daily energy-saving habits. We show that households with eco-friendly behaviors are more likely to investment in well-differentiated EE measures as well as to steer daily habits towards energy savings. However, no effects are found for households with environmental attitudes based on stated willingness to pay to protect the environment. In addition to this, households belonging to higher income groups and education levels are more likely to invest in EE but not to adopt energy-saving habits; while households with older members are less likely to invest in EE and show fewer eco-friendly habits.
    Keywords: Energy efficiency, investment, behavior, habits
    JEL: Q41 Q48 Q58
    Date: 2015–10
  4. By: Saito, Yoko; Saito, Hisamitsu
    Abstract: The perceived health and environmental risks of genetically modified (GM) technology have impeded its diffusion in developed countries. However, GM crops, which can provide direct consumer as well as producer value, have recently been developed. This study applies a stated choice experiment to examine whether the addition of a medical benefit can improve the welfare of the beneficiaries of the newly developed GM variety. Our results show a tradeoff between general worries over GM technology and GM food’s specific health benefits. A marketing program should therefore be designed to inform and persuade consumers of these features.
    Keywords: genetically modified research design, health, stated-preference method.
    JEL: D12 I10 Q13
    Date: 2015–11–18
  5. By: María L. Loureiro (Department of Foundations of Economic Analysis, University of Santiago de Compostela); Xavier Labandeira (Rede (Universidade de Vigo) and Economics for Energy); Michael Hanemann (Arizona State University and University of California at Berkeley)
    Abstract: Transport is essential for the control of future greenhouse gas (GHG) emissions and thus a target for active policy intervention in the future. Yet, social preferences for policies are likely to play an important role. In this paper we first review the existing literature on preferences regarding low- GHG car fuels, but also covering policy instruments and strategies in this area. We then present the results of a survey of Spanish households aimed at measuring preferences for climate change policies. We find a positive WTP (in the form of higher car fuel prices) for a policy to reduce GHG emissions through biofuels. There is, however, significant heterogeneity in public preferences due to personal motivations (accounted for via factor analysis of responses to attitudinal questions) and to socio-demographicvariables.
    Keywords: biofuels, WTP, contingent valuation
    JEL: Q54 Q58 R48
  6. By: Harin, Alexander
    Abstract: In random–lottery incentive experiments, the choices of certain outcomes are stimulated by uncertain lotteries. This “certain–uncertain” inconsistency is evident, but only recently emphasized. Because of it, conclusions from a random–lottery incentive experiment that includes a certain outcome cannot be unquestionably correct. Well-known experimental results and purely mathematical theorems support this. The main result presented here is: The usual experimental systems of utility and prospect theories may need additional independent analyses in the context of the “certain–uncertain” inconsistency.
    Keywords: utility; prospect theory; experiment; incentive; random-lottery incentive system; Prelec; probability weighting function;
    JEL: C1 C9 C90 C91 C93 D8 D81
    Date: 2015–11–16
  7. By: Sofia F. Franco
    Abstract: This paper examines the effects of changes in downtown parking supply on urban welfare, modal choice decisions and urban spatial structure using a spatial general equilibrium model of a closed monocentric city with two transport modes, endogenous residential parking and a form of bottleneck congestion at the CBD. Our analysis shows that parking reforms at the CBD that increase delay congestion costs in the short-run such as parking supply limits can be welfare improving if other commuting externalities such as air pollution can be reduced. In addition, because parking limits can also change location decisions such as where to live and invest they may complement anti-sprawl policies efforts by leading to a more compact urban spatial structure in the long run. We also show that changes in downtown parking supply can have different spatial impacts on the market supply of residential parking by affecting urban residents’ location decisions. Finally, we discuss the role of parking pricing as a complementary tool of congestion pricing to combat congestion in central areas and investigate whether the self-financing theorem of transportation economics holds within the context of our spatial urban model. JEL codes:
    Keywords: Downtown Parking, Bottleneck Congestion, Urban Form, Modal Choice
    Date: 2015
  8. By: Helmers, Christian; Krishnan, Pramila; Patnam, Manasa
    Abstract: Using high-frequency transaction-level data from an online retail store, we examine whether consumer choices on the internet are consistent with models of limited attention. We test whether consumers are more likely to buy products that receive a saliency shock when they are recommended by new products. To identify the saliency effect, we rely on i) the timing of new product arrivals, ii) the fact that new products are per se highly salient upon arrival, drawing more attention and iii) regional variation in the composition of recommendation sets. We find a sharp and robust 6% increase in the aggregate sales of existing products after they are recommended by a new product. To structurally disentangle the effect of saliency on a consumer’s consideration and choice decision, we use data on individual transactions to estimate a probabilistic choice set model. We find that the saliency effect is driven largely by an expansion of consumers’ consideration sets.
    Keywords: advertising; limited attention; online markets
    JEL: D22 K11 M30 O34
    Date: 2015–11

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