nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2016‒01‒03
eleven papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Heterogeneity In General Practitioner's Preferences for Quality Improvement Programs: A Choice Experiment And Policy Simulation in France By Mehdi Ammi; Christine Peyron
  2. Household Location Decisions and the Value of Climate Amenities By Paramita Sinha; Maureen L. Cropper
  3. Deriving Australian Citizens’ Willingness to Pay for Carbon Farming Benefits: A Choice Experiment Study By Landstra, Ynze; Kragt, Marit E.
  4. Modeling the Effects of Grade Retention in High School By Baert, Stijn; Cockx, Bart; Picchio, Matteo
  5. A note on sufficiency in binary panel models By Koen Jochmans; Thierry Magnac
  6. Dynamic R&D choice and the impact of the firm's financial strength By Peters, Bettina; Roberts, Mark J.; Vuong, Van Anh
  7. Does improving Public Transport decrease Car Ownership? Evidence from the Copenhagen Metropolitan Area By Ismir Mulalic; Ninette Pilegaard; Jan Rouwendal
  8. Disposición a pagar por atributos de bienes de no mercado By Lupín, Beatriz; Kap, Miriam; Muñoz, Agustina
  9. Surplus Identification with Non-Linear Returns By Pete Lunn; Jason J. Somerville
  10. Eliciting Preferences Over Risk: An Experiment By Morone, Andrea; Temerario, Tiziana
  11. Girls' Schooling Choices and Home Production: Evidence from Pakistan By Reis, Hugo

  1. By: Mehdi Ammi; Christine Peyron
    Abstract: Despite increasing popularity, quality improvement programs (QIP) have had modest and variable impacts on enhancing the quality of physician practice. We investigate the heterogeneity of physicians' preferences as a potential explanation of these mixed results in France, where the national voluntary QIP – the CAPI – has been cancelled due to its unpopularity. We rely on a discrete choice experiment to elicit heterogeneity in physicians' preferences for the financial and non-financial components of QIP. Using mixed and latent class logit models, results show that the models should be used in concert to shed light on different aspects of the heterogeneity in preferences. In particular, the mixed logit demonstrates that heterogeneity in preferences is concentrated on the pay-for-performance component of the QIP, while the latent class model shows that physicians can be grouped in four homogenous groups with specific preference patterns. Using policy simulation, we compare the French CAPI with other possible QIPs, and show that the majority of the physician subgroups modelled dislike the CAPI, while favouring a QIP using only non-financial interventions. We underline the importance of modelling preference heterogeneity in designing and implementing QIPs.
    Keywords: quality improvement programs, general practitioners, discrete choice experiment, mixed logit, latent class logit, policy simulation
    JEL: I11 I18 C25
    Date: 2015–12
  2. By: Paramita Sinha; Maureen L. Cropper
    Abstract: We value climate amenities by estimating a discrete location choice model for U.S. households. The utility of each Metropolitan Statistical Area (MSA) depends on location-specific amenities, earnings opportunities, housing costs, and the cost of moving to the MSA from the household head’s birthplace. We use the estimated trade-off between wages, housing costs and climate amenities to value changes in mean winter and summer temperatures. We find that households sort among MSAs due to heterogeneous tastes for winter and summer temperature. Preferences for winter and summer temperature are negatively correlated: households that prefer milder winters, on average, prefer cooler summers and households that prefer colder winters prefer warmer summers. Households in the Midwest region, on average, have lower marginal willingness to pay to increase winter and reduce summer temperatures than households in the Pacific and South Atlantic census divisions. We use our results to value changes in winter and summer temperature for the period 2020 to 2050 under the B1 (climate-friendly) and A2 (more extreme) climate scenarios. On average, households are willing to pay 1% of income to avoid the B1 scenario and 2.4% of income to avoid the A2 scenario.
    JEL: Q5 Q51
    Date: 2015–12
  3. By: Landstra, Ynze; Kragt, Marit E.
    Abstract: This work was undertaken to fulfil the Internship requirements of Mr. Landstra’s MSc degree (Environmental Economics and Natural Resources) at Wageningen University.
    Keywords: Climate change mitigation, Carbon Farming Initiative, Choice experiments, Auxillary benefits, Australia, Emission Reduction Fund, Environmental Economics and Policy, Q51, Q54, Q57,
    Date: 2015–12–19
  4. By: Baert, Stijn (Ghent University); Cockx, Bart (Ghent University); Picchio, Matteo (Università Politecnica delle Marche, Ancona)
    Abstract: A dynamic discrete choice model is set up to estimate the effects of grade retention in high school, both in the short- (end-of-year evaluation) and long-run (drop-out and delay). In contrast to regression discontinuity designs, this approach captures treatment heterogeneity and controls for grade-varying unobservable determinants. A method is proposed to deal with initial conditions and with partial observability of the track choices at the start of high school. Forced track downgrading is considered as an alternative remedial measure. In the long-run, grade retention and its alternative have adverse effects on schooling outcomes and, more so, for less able pupils.
    Keywords: education, grade retention, track mobility, dynamic discrete choice models, heterogeneous treatment effects
    JEL: C33 C35 I21
    Date: 2015–12
  5. By: Koen Jochmans (ECON - Département d'économie - Sciences Po); Thierry Magnac (GREMAQ - Groupe de recherche en économie mathématique et quantitative - CNRS - Centre National de la Recherche Scientifique - Institut national de la recherche agronomique (INRA) - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales)
    Abstract: Consider estimating the slope coefficients of a fixed-effect binary-choice model from two-period panel data. Two approaches to semiparametric estimation at the regular parametric rate have been proposed. One is based on a sufficient statistic, the other is based on a conditional-median restriction. We show that, under standard assumptions, both approaches are equivalent.
    Keywords: binary choice, fixed effects, panel data, regular estimation, sufficiency.
    Date: 2015–12–01
  6. By: Peters, Bettina; Roberts, Mark J.; Vuong, Van Anh
    Abstract: This article investigates how a firm's financial strength affcts its dynamic decision to invest in R&D. We estimate a dynamic model of R&D choice using data for German firms in high-tech manufacturing industries. The model incorporates a measure of the firm's financial strength, derived from its credit rating, which is shown to lead to substantial differences in estimates of the costs and expected long-run benefits from R&D investment. Financially strong firms have a higher probability of generating innovations from their R&D investment, and the innovations have a larger impact on productivity and profits. Averaging across all firms, the long run benefit of investing in R&D equals 6.6 percent of firm value. It ranges from 11.6 percent for firms in a strong financial position to 2.3 percent for firms in a weaker financial position.
    Keywords: R&D choice,Financial strength,Innovation,Productivity,Dynamic structural model
    JEL: O31 O32 G30
    Date: 2015
  7. By: Ismir Mulalic (Technical University Denmark, Denmark); Ninette Pilegaard (Technical University Denmark, Denmark); Jan Rouwendal (VU University Amsterdam, the Netherlands)
    Abstract: Car ownership is lower in urban areas, which is probably related to the availability of better public transport. Better public transport thus may offer the possibility to relieve the many problems (congestion, health, and parking) associated with the presence of cars in urban areas. To investigate this issue, we develop and estimate a model for the simultaneous choice of a residential area and car ownership. The model is estimated on Danish register data for single-earner and dual-earners households in the greater Copenhagen metropolitan area. We pay special attention to accessibility of the metro network which offers particularly high quality public transport. Simulations based on the estimated model show that for the greater Copenhagen area a planned extension of the metro network decreases car ownership by 2-3%. Our results suggest also a substantial increase in t he interest for living in areas close to the metro network, that affects the demographic composition of neighbourhoods.
    Keywords: car ownership; public transport; residential sorting
    JEL: R4 R1 D1
    Date: 2015–12–24
  8. By: Lupín, Beatriz; Kap, Miriam; Muñoz, Agustina
    Abstract: Diversos bienes, como los relacionados con el medio ambiente o con el patrimonio cultural, se denominan de "no mercado" pues carecen de precio al no existir un mercado donde puedan ser transados. Ahora bien, lo anterior no significa que carezcan de valor económico. De hecho, diferentes metodologías permiten estimar la valoración que representa para los individuos su "consumo", centrándose en las características específicas que poseen. Un experimento Choice Modellig es una técnica de captación de datos, mediante la cual, en una situación ficticia pero realista de compra, los consumidores evalúan integralmente el bien en cuestión, considerando distintos niveles de sus atributos. Tomando las preferencias declaradas por los participantes, se basa en el marco conceptual aportado por la Teoría del Consumidor de Lancaster (1966) y por el Modelo de Utilidad Aleatoria (Marschak, 1960). Con los datos así recolectados, la literatura especializada formula modelos econométricos a fin de calcular la disposición a pagar por cada uno de los atributos involucrados -aplicando derivadas parciales- y medidas de cambio de bienestar. La actividad pedagógica a desarrollar tiene como finalidad incluir otros lenguajes, además del coloquial y del simbólico propios de la Matemática y de la Estadística. En este sentido, se les propondrá, a los estudiantes, un recorrido fotográfico y auditivo por espacios significativos vinculados a bienes ambientales y culturales de la Ciudad de Mar del Plata, de manera que profundicen el proceso de comprensión y apropiación de conceptos ligados a la valoración multiatributo, descubriendo las dimensiones relevantes.
    Keywords: Disposición a Pagar; Bienes Públicos; Valoración Económica; Enseñanza de la Economía;
    Date: 2015–06
  9. By: Pete Lunn; Jason J. Somerville
    Abstract: We present evidence from two experiments designed to quantify the impact of cognitive constraints on consumers’ ability to identify surpluses. Participants made repeated forced-choice decisions about whether products conferred surpluses, comparing one or two plainly perceptible attributes against displayed prices. Returns to attributes varied in linearity, scale and relative weight. Despite the apparent simplicity of this task, in which participants were incentivised and able to attend fully to all relevant information, surplus identification was surprisingly imprecise and subject to systematic bias. Performance was unaffected by monotonic non-linearities in returns, but non-monotonic non-linearities reduced the likelihood of detecting a surplus. Regardless of the shape of returns, learning was minimal and largely confined to initial exposures. Although product value was objectively determined, participants exhibited biases previously observed in subjective discrete choice, suggesting common cognitive mechanisms. These findings have implications for consumer choice models and for ongoing attempts to account for cognitive constraints in applied microeconomic contexts.
    Date: 2015–12
  10. By: Morone, Andrea; Temerario, Tiziana
    Abstract: Previous research has begun to investigate how small groups make decisions when facing risky choices. However, no consensus has been reached. One stream of research found that groups are more risk averse, while another one reported the contrary and some studies did not even find any significant difference. This paper is meant to provide a clear comparison between two different experimental designs from Harrison et al. (2012) and Zhang and Casari, (2012). The former tests the risk preferences of groups of three members where group’s decision is taken with the majority rule; the latter, also tests risk preferences of three-members group, but using a different lottery set and aggregation rule, i.e. unanimity. These two experiments lead to different results: Harrison et al. (2012) did not find any substantial difference between individuals’ and groups’ preferences over risk, while Zhang and Casari (2012) found that groups tend to be more prone to the risk neutrality than individuals. Additionally, we present a replication study of Harrison et al. (2012) and Zhang and Casari (2012) in order to check to what extent the lottery set and the aggregation rule (majority or unanimity) adopted to elicit preferences may affect the final group choice. It results that individual and group choices are not significantly different, regardless of the lottery set and the aggregation rule used in the experimental design.
    Keywords: risk choice; decision-making under risk and uncertainty; experimental economics; group behavior;
    JEL: C92 D81
    Date: 2015–11
  11. By: Reis, Hugo (Banco de Portugal)
    Abstract: The paper develops and estimates a dynamic structural model that allows for the interrelations between girls' schooling and mothers' labor market participation decision, in a rural area of Pakistan where drop-out rates are considerably high. The model incorporates home production, which is critical for understanding the behavior of mothers when deciding girls' schooling. Results suggest that monetary incentives are a good mechanism to increase girls' school enrollment, but not the most cost effective. The impact of the conditional cash transfer program on secondary school enrollment rate was only one third of the impact of the school building program. Regarding welfare, the difference between schemes is smaller. Results also highlight the effectiveness of the role of conditionality.
    Keywords: girls' schooling, home production, development economics, structural model, discrete choice dynamic programming models
    JEL: I25 I28
    Date: 2015–12

This nep-dcm issue is ©2016 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.