nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2016‒12‒04
seven papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. New modalities for managing drought risk in rainfed agriculture: Evidence from a discrete choice experiment in Odisha, India: By Ward, Patrick S.; Makhija, Simrin
  2. Rewarding truthful-telling in stated preference studies By Pierre-Alexandre Mahieu; Romain Crastes; Jordan Louviere; Ewa Zawojska
  3. Gender dimensions on farmers’ preferences for direct-seeded rice with drum seeder in India: By Khan, Md. Tajuddin; Kishore, Avinash; Joshi, Pramod Kumar
  4. The Tree that Hides the Forest: A Note on Revealed Preference By João Ferreira
  5. Investigating Household Preferences for Restoring Pallikaranai Marsh By Suganya Balakumar; Sukanya Das
  6. Technology Choice for Reducing NOx Emissions: An Empirical Study of Chinese Power Plants By Teng Ma; Kenji Takeuchi
  7. The effect of olfactory sensory cues on economic decision making By Kechagia, Varvara; Drichoutis, Andreas C.

  1. By: Ward, Patrick S.; Makhija, Simrin
    Abstract: In this paper we explore the potential for a new approach to managing drought risk among rainfed rice producers in Odisha, India. Droughts have historically been a serious constraint to agricultural production in rainfed agricultural systems, with droughts resulting in significant reductions in both yields and cultivated area, in turn leading to significant impacts on rural livelihoods and food security. Scientists and policy makers have proposed various strategies for managing risks, with limited success. In this study we consider two such strategies, specifically drought-tolerant rice and weather index insurance. While neither drought-tolerant cultivars nor weather index insurance products are perfect solutions for adequately managing drought risk in and of themselves, there is scope to exploit the benefits of each and bundle them into a complementary risk management product, specifically through proper index calibration and an optimized insurance design. In this study, we explore preferences for such a complementary risk management product using discrete choice experiments in Odisha, India. We are able to estimate the added value that farmers perceive in the bundled product above and beyond the value associated with each of the independent products. We also show that valuations are sensitive to the basis risk implied by the insurance product, with farmers less enthusiastic about risk management products that leave significant risks uninsured.
    Keywords: droughts, risk, drought tolerance, rice, insurance, rainfed farming, agricultural policies,
    Date: 2016
  2. By: Pierre-Alexandre Mahieu (University of Nantes, LEMNA); Romain Crastes (University of Leeds, Centre of Choice Modelling); Jordan Louviere (University of South Australia, School of Marketing); Ewa Zawojska (Faculty of Economic Sciences, University of Warsaw)
    Abstract: Stated preference surveys rarely provide conditions where a respondent’s optimal strategy is to answer truthfully. As a result, the reliability of stated preference data is often questioned. We consider a new approach economic theory-based approach to incentivize respondents to answer truthfully. Our approach is based on a lie detector coupled with a reward. We discuss theoretical predictions of the approach and test them empirically in a split sample choice experiment dealing with a tree planting program. We find lie detection (i) increases time spent to complete the valuation tasks and (ii) decreases the variance of the error term by using a hybrid choice model that accounts for possible endogeneity. Our results are encouraging but more research is needed to assess the validity of this new approach.
    Keywords: stated preferences, truth-telling, choice experiment
    JEL: Q51 Q30
    Date: 2016
  3. By: Khan, Md. Tajuddin; Kishore, Avinash; Joshi, Pramod Kumar
    Abstract: This study measures the willingness of male and female farmers to pay for climate-smart technology in rice. Rice is the most important crop in India in terms ofarea, production,and consumption. It is also the biggest source of greenhouse gas emissions among all crops. Direct-seeded rice (DSR)with drum seeder, a climate-smart technology, requires less labor and water and is more climate friendly than transplanted rice; yet,its adoption is slow in India. Theauthors of this studycarried out a discrete choice experiment with 666 farmers from the Palghar and Thane districts of Maharashtra to measure their willingness to pay for drum seeders—a key piece of equipment for adopting DSR. Both male and female farmers were surveyed to capture the heterogeneity in their valuation of the key attributes of drumseeders. Although both male and female farmers prefer cheaper drum seeders, the marginal valuation of different attributes of the drum seeder varies by the farmers’ gender. The authors also used the Women Empowerment in Agriculture Index (WEAI), developed by the International Food Policy Research Institute (IFPRI), to collect self-reported data on the role and say of women in agriculture. The respective gender roles in the family and on the farm seem to explain some of this difference. Men have a greater say over how the family spends the cash. Accordingly, men tend to have a higher willingness to pay for attributes that increase income (increase in yield) or reduce cash costs (reduction in the seedrate). Women contribute a large share of the labor for transplanting rice, much of whichis unpaid work on family farms. Not surprisingly, therefore, women seem to value labor saving significantly more than their male counterparts. Further, theWEAI data show that although men in the family have more say, women do have an influence on decisions regarding crop production and the adoption of new technologies,to an extent. Therefore, to enhance the adoption of drum seeders, the product designers and extension workers should also target women
    Keywords: gender, rice, willingness to pay, women, sowing methods, technology adoption,
    Date: 2016
  4. By: João Ferreira (AMSE - Aix-Marseille School of Economics - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - EHESS - École des hautes études en sciences sociales)
    Abstract: The common interpretation given to choice behavior that satisfies the traditional revealed preference axioms is that it results from the maximization of a single preference. We show that choice data alone does not enable one to rule out the possibility that the choice behavior that satisfies the revealed preference axioms is instead the result of the aggregation of a collection of distinct preferences. In particular, we show that any ordering is observationally equivalent to a majoritarian aggregation of a collection of distinct dichotomous orderings. We also show that any ordering is observationally equivalent to a Borda's aggregation of a collection of distinct linear orderings.
    Keywords: revealed preference theory,rationalization,dichotomous preferences,aggregation rules,choice data
    Date: 2016–10
  5. By: Suganya Balakumar (Madras School of Economics); Sukanya Das (Madras School of Economics)
    Abstract: The study examines households’ willingness to pay for the conservation of Pallinkaranai marsh located in the south of Chennai, Tamil Nadu. A stated preference method, namely, Contingent Valuation method (CVM) over 213 households has been employed. The results reveal that farmers are willing to pay for the restoration of the marsh which provides higher level of water quality, recreational benefit and restorartion of flora and fauna.
    Keywords: Pallinkaranai, Contingent valuation, Chennai, bivariate probit regressionClassification-JEL: Q510, C83, Q260
    Date: 2015–10
  6. By: Teng Ma (Graduate School of Economics, Kobe University); Kenji Takeuchi (Graduate School of Economics, Kobe University)
    Abstract: This study investigates the choices of denitration technology in the Chinese thermal power sector. Using a multinominal logit model of the choices among 1,135 boilers in thermal power plants operating in China in 2013, we analyze how the choices were inuenced by government policies, the stringency of national standards, and subsidies for using speci_c technology. The results are as follows. First, China's 12th Five-year Plan might make it more attractive for plants to choose the cheapest denitration technology among the three options examined in this study. Second, technology choices differed signi_cantly by region before the 12th Five-year Plan period. These differences have disappeared, perhaps due to the economic development across all regions of China. Third, electricity price subsidies offered to plants that use denitration equipment might affect their technology choice. These results suggests that plants might choose the cheapest technology available, in order to lower investment costs.
    Keywords: technology choice, NOx emissions, China, thermal power sector
    JEL: O33 Q53 Q55
    Date: 2016–11
  7. By: Kechagia, Varvara; Drichoutis, Andreas C.
    Abstract: Several studies show that sensory cues influence consumer decision making processes. While scent is a key component of a market's physical environment, it has received far less attention in the academic literature as compared, for example, with visual cues. In addition, most of the studies that examine the effect of ambient scents fail on one or both of these criteria: to properly control the influence of nuisance factors and/or to elicit preferences under real monetary incentives. We collected data from a laboratory experiment where we varied on a between subjects basis the dispersion of a citrus fragrance. We then elicited subjects' willingness to pay for two unbranded products - a mug and a chocolate - by having subjects participate in a 2nd price Vickrey auction. We also elicited subjects' risk preferences using lottery choice tasks. Our results show a statistically and economically significant effect on subjects' willingness to pay: valuations increased between 37% - 43% for subjects who were exposed to a citrus scent as compared to the control group. We do not find a statistically significant effect of the citrus scent on subjects' risk aversion.
    Keywords: scent cues; fragrance; olfactory; willingness to pay; risk preferences; risk aversion; laboratory experiment
    JEL: C91 D44 D81 D87
    Date: 2016–10–10

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