nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2016‒05‒14
seventeen papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Valuing Groundwater Quality: Does Averting Behavior Matter? By Melo, Grace
  2. Community Supported Agriculture and Preferences for Risk and Fairness By Bernard, Kévin; Bonein, Aurélie; Bougherara, Douadia
  3. An Examination of Consumer Willingness to Pay for Local Products By Adalja, Aaron; Hansen, James; Towe, Charles; Tselepidakis, Elina
  4. Marketing Channel Choice of Cocoa Farmers in Madiun Regency, East Java, Indonesia By Rifin, Amzul; Suprehatin; Suryana, Rita Nurmalina; Akbar, Indra Dilana
  5. Do Financial Incentives Influence GPs' Decisions to Do After-Hours Work? A Discrete Choice Labour Supply Model By Broadway, Barbara; Kalb, Guyonne; Li, Jinhu; Scott, Anthony
  6. Consumer Preferences for Pet Health Insurance By Williams, Angelica; Coble, Keith H.; Williams, Brian; Dicks, Michael; Knippenberg, Ross
  7. The relationship between social capital and health in China By Xue, Xindong; Mo, Erxiao; Reed, W. Robert
  8. Rational Inattention Dynamics: Inertia and Delay in Decision-Making By Jakub Steiner; Colin Stewart; Filip Matejka
  9. Eye Tracking to Model Attribute Attendance By Chavez, Daniel; Palma, Marco; Collart, Alba J.
  10. Home Cooking and Willingness to Pay: Local Blueberry Pancake, Muffin, and Banana Bread Mixes in a Take-and-Bake Experiment By Ilunga, Yves T.; Woods, Timothy A.; Batte, Marvin; Zarebanadkoki, Samane
  11. Similarities and Differences of Animal Welfare Perceptions between U.S. Cow-Calf Producers and the Public By McKendree, Melissa G.S.; Tonsor, Glynn T.; Wolf, Christopher A.
  12. Coping with landslide risk through preventive resettlement. Designing optimal strategies through choice experiments for the Mount Elgon region, Uganda By Vlaeminck, Pieter; Maertens, Miet; Isabirye, Moses; Vanderhoydonks, Filip; Poesen, Jean; Deckers, Jozef; Vranken, Liesbet
  13. Tennessee Consumers’ Willingness to Pay for Tennessee Wine By Connie, N; Christopher, N.; Kimberly, L.; David; Margarita
  14. Unobserved Preference Heterogeneity in Demand Using Generalized Random Coefficients By Arthur Lewbel; Krishna Pendakur
  15. Are Biofuels an Environment-friendly Choice for Transport? A Study from Vietnam By Loan T. Le
  16. Losing the environment: the endowment effect and environmental discounting By Simon Dietz; Frank Venmans
  17. Forest Resources Dependency of the Rural Community: A Case Study in Bokeo Province, Lao PDR By Bounmy Somsoulivong

  1. By: Melo, Grace
    Abstract: Contingent valuation (CV) or defensive behavior data is often used to estimate the economic value of water quality. Although combining these data (i.e., stated and revealed preferences) mitigates the potential bias from using either type of information, the costs of collecting both could overwhelm the benefits. We attempt to find a convenient estimation method by using a proxy indicator for revealed preferences in the analysis of stated preference data. Specifically, this study explores the effect of individuals’ reported defensive behavior on their stated preferences for groundwater quality. Logit models based on random utility theory were estimated using referendum CV data at household level collected in Maine, US. The results suggest that failure in accounting for defensive behavior in the valuation could result in a bias willingness to pay estimate for groundwater quality. We also found that the monetary value for groundwater quality was small, even though subsoil water constituted an important drinking water supply in the survey period. The results also revealed that respondents’ averting behavior were mainly influenced by their perception of groundwater quality. Implications of our findings for welfare analysis are discussed.
    Keywords: contingent valuation, averting behavior, groundwater quality, Environmental Economics and Policy, Research Methods/ Statistical Methods, Q5, Q2, H23,
    Date: 2016
  2. By: Bernard, Kévin; Bonein, Aurélie; Bougherara, Douadia
    Abstract: We aim to elicit consumers’ preferences for attributes of consumer supported agriculture (CSA) contracts and their determinants, especially risk and fairness preferences. We combine two incentivized field experiments with a stated choice survey. Risk preferences are structurally-elicited from several binary lottery choices and fairness preferences from a modified dictator game. We use a stated choice survey to determine consumers’ preferences for three attributes of CSA contracts: duration, loss in basket size due to production risks and price change. We face-to-face interviewed 162 CSA members. In line with fairness theory, we find consumers are averse to advantageous inequality (AI) toward CSA and non CSA farmers and averse to disadvantageous inequality (DI) toward non CSA farmers; but, we also find evidence of DI seeking toward CSA farmers. In the stated choice survey, we find consumers prefer longer contracts and that it is risk-driven rather than fairness-driven. As expected, consumers exhibit a dislike for losses and for share price increases. We find a high willingness to pay to avoid losses. High AI averse consumers tend to be less sensitive to losses. High DI seeking consumers tend to be less sensitive to losses and price increase.
    Keywords: CSA, Stated choice, Field experiment, Risk preferences, Fairness preferences, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Environmental Economics and Policy, Risk and Uncertainty, C93, D63, D81, Q18,
    Date: 2016
  3. By: Adalja, Aaron (University of Maryland); Hansen, James (University of Maryland); Towe, Charles (University of Connecticut); Tselepidakis, Elina (University of Maryland)
    Abstract: This paper uses data collected from hypothetical and non-hypothetical choice-based conjoint survey instruments to estimate willingness to pay for distance-based local food products. The survey was administered to three different groups of respondents: members of a consumer buying club with local and grass-fed market experience, a random sample of Maryland residents, and shoppers at a non-specialty suburban Maryland grocery store. We find that both the random sample of Maryland residents and the grocery store shoppers are willing to pay a premium for local products, but view local and grass-fed production as substitutes. Conversely, members of the consumer buying club are willing to pay significantly less for local than their counterparts, but do not conflate local with other premium attributes, such as grass-fed production.
    Keywords: conjoint analysis, field experiment, local, grass-fed, willingness to pay, beef
    Date: 2014–09
  4. By: Rifin, Amzul; Suprehatin; Suryana, Rita Nurmalina; Akbar, Indra Dilana
    Abstract: The cocoa value chain developments in Indonesia are still promising and challenging as there are continuing emerging market opportunities and grown largely by smallholder farmers. However, there is limited attention on cocoa value chain in term of smallholder farmers who potentially to be promoted with respect to their marketing channel choice. The objective of this study is to understand the types of beans preferred and the factors of buyers chosen by farmers. This study shows that farmers still prefer unfermented beans rather than fermented beans. Using multinomial logit analysis, the results indicate that age and farming experience influenced farmers in selling to sub-regency and regency traders compare to village traders. Meanwhile, number of trees and price is affecting the farmers to sell to regency level traders to village level traders. Understanding what farmers’ preferences when they sell cocoa beans and why farmers choose certain selling channels help to design a better policy to improve farmers’ livelihood and cocoa value chain development.
    Keywords: cocoa value chain, marketing channel choice, multinomial logit, Crop Production/Industries, International Development, Marketing, Q13,
    Date: 2015
  5. By: Broadway, Barbara (Melbourne Institute of Applied Economic and Social Research); Kalb, Guyonne (Melbourne Institute of Applied Economic and Social Research); Li, Jinhu (Melbourne Institute of Applied Economic and Social Research); Scott, Anthony (Melbourne Institute of Applied Economic and Social Research)
    Abstract: This paper analyses doctors' supply of after-hours care, and how it is affected by personal and family circumstances as well as the earnings structure. We use detailed survey data from a large sample of Australian General Practitioners to estimate a structural, discrete-choice model of labour supply and after-hours care. This allows us to jointly model how many daytime-weekday hours a doctor works, and his or her probability of providing after-hours care. The underlying utility function varies across individual and family characteristics. We simulate labour supply responses to an increase in doctors' hourly earnings, both in a daytime-weekday setting and for after-hours care. Among doctors overall, men and women increase their daytime-weekday working hours if their hourly earnings in this setting increases, but only to a very small extent. Men's labour supply elasticities do not change if their family circumstances change, but for women the small behavioural response disappears completely if they have preschool-aged children. Doctors are somewhat more likely to provide after-hours care if their hourly earnings in that setting increases, but again the effect is very small and is only evident in some sub-groups. Moreover, higher earnings in weekday-daytime practice reduces the probability of providing after-hours care, particularly for men. Increasing doctors' earnings appears to be at best relatively ineffective in encouraging increased provision of after-hours care, and may even prove harmful if incentives are not well-targeted.
    Keywords: labour supply, after-hours care, wage elasticity, health workforce, MABEL
    JEL: I11 J22 J44 J21
    Date: 2016–04
  6. By: Williams, Angelica; Coble, Keith H.; Williams, Brian; Dicks, Michael; Knippenberg, Ross
    Abstract: This study uses a choice experiment survey to examine pet owner’s preferences for Pet Health Insurance policies. Our results indicate that pet insurance premium, reimbursement level, unlimited benefits and wellness included in pet health insurance plan have significant effects on pet owners' purchase decisions.
    Keywords: Health Economics and Policy, Institutional and Behavioral Economics,
    Date: 2016
  7. By: Xue, Xindong; Mo, Erxiao; Reed, W. Robert
    Abstract: This paper uses the 2005 and 2006 China General Social Survey (CGSS) to study the relationship between social capital and health in China. It is the most comprehensive analysis of this subject to date, both in the sizes of the samples it analyses, in the number of social capital variables it investigates, and in its treatment of endogeneity. The authors identify social trust, social relationships, and social networks as important determinants of self-reported health. The magnitude of the estimated effects are economically important, in some cases being of the same size or larger than the effects associated with age and income. Their findings suggest that there is scope for social capital to be a significant policy tool for improving health outcomes in China.
    Keywords: social capital,trust,self-reported health,China,ordered probit regression,heteroskedastic ordered probit regression,interaction effects,endogeneity
    JEL: I1 I18 P25 O53
    Date: 2016
  8. By: Jakub Steiner; Colin Stewart; Filip Matejka
    Abstract: We solve a general class of dynamic rational-inattention problems in which an agent repeatedly acquires costly information about an evolving state and selects actions. The solution resembles the choice rule in a dynamic logit model, but it is biased towards an optimal default rule that is independent of the realized state. The model provides the same fit to choice data as dynamic logit, but, because of the bias, yields different counterfactual predictions. We apply the general solution to the study of (i) the status quo bias; (ii) inertia in actions leading to lagged adjustments to shocks; and (iii) the tradeoff between accuracy and delay in decision-making.
    Keywords: Rational inattention; stochastic choice; dynamic logit; information acquisition
    JEL: D81 D83 D90
    Date: 2016–05–04
  9. By: Chavez, Daniel; Palma, Marco; Collart, Alba J.
    Abstract: The literature on choice experiments has been dealing with ways to refine preference elicitation from subjects and predictive power of models. Technological advances such as eye tracking has improved our understanding on how much of the attributes and attribute levels presented to participants is being considered in the decision making process in these kind of experiments. This study investigates subjects’ degree of attendance to attributes and how it influences their choices. The amount of time the subjects spent observing each attribute, relative to all available information on each choice set is used to estimate the attribute attendance. This indicates the revealed attendance to the attributes in the experiment. A simple econometric approach compares the parameter estimates from revealed attribute attendance adjusted models using data from an eye tracking device and a model endogenously inferring the probabilities of using information from each attribute in the choice. The results show that the assumption that participants use all the available information to make their decisions produces significant differences in the parameter estimates, leading to potential bias. The results also illustrate that model fit and predictive power is greatly increased by using revealed attendance levels using eye tracking measures. The most significant improvement however, is to endogenously infer attribute attendance; even more so with revealed attendance indicators.
    Keywords: Choice Experiments, Eye-Tracking, Attribute Attendance, Agribusiness, Institutional and Behavioral Economics, Research Methods/ Statistical Methods, C91, C18,
    Date: 2016–01–22
  10. By: Ilunga, Yves T.; Woods, Timothy A.; Batte, Marvin; Zarebanadkoki, Samane
    Abstract: Home Cooking and Willingness to Pay: Local Blueberry Pancake, Muffin, and Banana Bread Mixes in a Take-and-Bake Experiment
    Keywords: blueberry, Home cooking, value-added, willingness to pay, Community/Rural/Urban Development, Consumer/Household Economics, Marketing, D12, Q13,
    Date: 2016–01–06
  11. By: McKendree, Melissa G.S.; Tonsor, Glynn T.; Wolf, Christopher A.
    Abstract: The U.S. livestock industry is increasingly faced with pressure to adjust practices in response to societal concerns. A specific area of growing concern surrounds how production practices impact the welfare of farm animals. The objective of this analysis is to use best-worst scaling (maximum difference) to determine which practices the U.S. public and cow-calf producers view as the most effective and most practical practices to improve the welfare of beef cattle in the U.S. In meeting this objective, we determine similarities and differences in the public and producer views. Random parameters logit and latent class models are used to better understand heterogeneity within and across both the public and producers. Results indicate that both the U.S. public and cow-calf producers viewed providing access to fresh, clean feed and water appropriate for the animal’s physiological state, and providing adequate comfort through the use of shade, windbreaks, and ventilation assuring clean, dry, sanitary environmental conditions for cattle as both the most effective and most practical practices to improve the welfare of beef cattle. The practices which were viewed as the least effective and least practical were to castrate male calves either within the first three months of age or with pain control, and dehorn/disbud calves either before horn tissue adheres to the skull or with pain control. Implications for future research, possible verification programs, and related debates regarding beef cattle welfare are provided.
    Keywords: animal welfare, beef, best-worst scaling, cattle, demand, economics, supply, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Livestock Production/Industries, Marketing, Production Economics, Q00, Q11, Q13, Q16, Q19,
    Date: 2016
  12. By: Vlaeminck, Pieter; Maertens, Miet; Isabirye, Moses; Vanderhoydonks, Filip; Poesen, Jean; Deckers, Jozef; Vranken, Liesbet
    Abstract: Landslides are a widespread phenomenon in the East African highlands, significantly reducing agricultural productivity and affecting rural income generating activities. In addition, the livelihoods of the poorest are most likely to be adversely affected by landslides. Traditionally, landslide risk is reduced by means of effective planning and management. However, in many regions, these measures are incapable to offer a long-term solution because of high population density and land shortage. Therefore, our paper uses a choice experiment to investigate whether preventive resettlement could be a feasible disaster risk reduction strategy for the population at risk in agricultural areas in Bududa district, East Uganda. Our study provides the first analysis of resettlement related preferences of people that are affected by environmental degradation. Our results enable us to assess community support for resettlement strategies ex ante and give valuable policy advice for future resettlement plans in a very cost-effective manner.
    Keywords: International Development, Land Economics/Use,
    Date: 2015
  13. By: Connie, N; Christopher, N.; Kimberly, L.; David; Margarita
    Keywords: Consumer/Household Economics, Marketing,
    Date: 2016
  14. By: Arthur Lewbel (Boston College); Krishna Pendakur (Simon Fraser University)
    Abstract: We prove a new identification theorem showing nonparametric identification of the joint distribution of random coefficients in general nonlinear and additive models. This differs from existing random coefficients models by not imposing a linear index structure for the regressors. We then model unobserved preference heterogeneity in consumer demand as utility functions with random Barten scales. These Barten scales appear as random coefficients in nonlinear demand equations. Using Canadian data, we compare estimated energy demand functions with and without random Barten scales. We find that unobserved preference heterogeneity substantially affects the estimated consumer surplus costs of an energy tax.
    Keywords: unobserved heterogeneity, nonseparable errors, random utility parameters, random coefficients, equivalence scales, consumer surplus, welfare calculations
    JEL: C14 D12 D13 C21
    Date: 2015–11
  15. By: Loan T. Le (Faculty of Economics, Nong Lam University)
    Keywords: Biofuels, Transport, Vietnam
    Date: 2016–04
  16. By: Simon Dietz; Frank Venmans
    Abstract: It has recently been shown that, when discounting future improvements in the environment, relative prices matter. However, we argue relative prices are not the whole story. Not only is the environment a consumption good in its own right, with a corresponding environmental discount rate that depends on relative scarcity, it also matters that we tend to be losing it. That is, there is a considerable body of evidence from behavioural economics and stated-preference valuation showing that we are loss-averse, even in riskless choice settings. Therefore in this paper we introduce reference dependence and loss aversion – the endowment effect – to a model where welfare depends on consumption of a produced good and of environmental quality. We show that the endowment effect modifies the discount rate by introducing (i) an instantaneous endowment effect and (ii) a reference-level effect. Moreover we show that, when environmental quality is strictly decreasing, these two effects mostly combine to dampen our usual preference to smooth consumption over time – perhaps surprisingly, the endowment effect increases the environmental discount rate on these paths. In addition, on non-monotonic paths the endowment effect can give rise to substantial discontinuities in the discount rate.
    Date: 2016–04
  17. By: Bounmy Somsoulivong (Soakpaluang Road, Ban Wattnak Noi, Noy no.9, Sisatanak district, Vientiane, Lao PDR.)
    Abstract: This study used the Rapid Rural Appraisal Technique (RRAT) to examine the socio-economic situation of the rural community in Bokeo Province, Laos.It assesses the contribution of theforest resources to the rural community household’s economy and addresses theproblems associated with this forest dependency. This study aims to estimate the quantity and monetary value of various timber and non-timber forest products (TFPs & NTFPs), and the products cultivated and harvested from forestlands (CFLPs) on an annual basis. It also measured the rural household’s income derived from these products and those intended for annual household consumption needs. Descriptive statistics were used to summarize the data and measure the rural community’s forest dependency in the 12 villages of the Nam Nhou and Nam Choam areas, Bokeo province, Laos. Three kinds of nature of forest dependency were discussed in this study: (1) dependency for subsistence (2) dependency for inputs into the household production system and (3) dependency for income and employment.
    Keywords: stated preference survey
    Date: 2016–04

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.