nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2016‒12‒18
six papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Are private investors willing to pay for sustainable investments? A stated choice experiment By Gunnar Gutsche; Andreas Ziegler
  2. The Demand for Season of Birth By Damian Clarke; Sonia Oreffice; Climent Quintana-Domeque
  3. Accounting for local impacts of photovoltaic farms: two stated preferences approaches By Anabela Botelho; Lina Sofia Lourenço-Gomes; Lígia Costa Pinto; Sara Sousa; Marieta Valente
  4. Policy Choice and Product Bundling in a Complicated Health Insurance Market: Do People get it Right? By Nathan Kettlewell
  5. Use of and attitudes towards new technologies of persons 50+ in Austria (SHARE Austria) By Sylvia Frühwirth-Schnatter; Stefan Pittner; Andrea Weber; Rudolf Winter-Ebmer
  6. Willingness to pay and accept for hosting Olympic Games in Germany By Bakkenbüll, Linn-Brit; Dilger, Alexander

  1. By: Gunnar Gutsche (University of Kassel); Andreas Ziegler (University of Kassel)
    Abstract: This paper examines the willingness of private financial decision makers to pay for socially responsible investments (SRI). Our empirical analysis is based on unique data from a representative computer-based survey in Germany that especially comprised two stated choice experiments. The experiments referred to choices among several equity funds and among several three-year fixed-interest investment products and especially comprised sustainability criteria and financial performance indicators as main attributes. Our econometric analysis with mixed logit models reveals strong stated preferences and thus a considerable willingness to pay for sustainable investments. For example, the estimated mean willingness to sacrifice yearly nominal interest rates for sustainable fixed-interest investment products amounts to 0.21 percentage points among a variation between 1.30% and 2.10%. These results are very stable across several robustness checks that also include different techniques to mitigate possible hypothetical biases. Our latent class logit model analysis confirms a high extent of unobserved heterogeneity between different investor groups and especially reveals that specific social values and norms play an important role. Investor groups with strong considerations of norms by the social environment with respect to SRI and especially with high feelings of warm glow from SRI, a strong environmental awareness, and an affinity to left-wing parties have a substantially higher estimated mean willingness to pay for sustainable investments.
    Keywords: Socially responsible investments; stated choice experiments; mixed logit models; latent class logit models; willingness to pay; social values and norms
    JEL: G11 Q56 M14 G02 A13 C25
    Date: 2016
  2. By: Damian Clarke (Universidad de Santiago de Chile); Sonia Oreffice (University of Surrey); Climent Quintana-Domeque (University of Oxford and St Edmund Hall)
    Abstract: We study the determinants of season of birth, for white married women aged 20-45 in the US, using birth certificate and Census data. We also elicit the willingness to pay for season of birth through discrete choice experiments implemented on the Amazon Mechanical Turk platform. We document that the probability of a spring first birth is significantly related to mother's age, education, smoking status during pregnancy, and the mother working in "education, training, and library" occupations, whereas a summer first birth does not depend on socio-demographic characteristics. We find consistent but stronger correlates when focusing on second births, while all our findings are muted among unmarried women. We estimate the average willingness to pay for a spring birth to be 600 USD, which is about 18% of the most valued birth in our Amazon Mechanical Turk experimental sample or 15% of the mean charges for a normal birth in 2013 according to the Agency for Healthcare Research and Quality.
    Keywords: quarter of birth, willingness to pay, NVSS, ACS-IPUMS, Amazon Mechanical Turk, discrete choice experiments, fertility timing
    JEL: I10 J01 J13
    Date: 2016–12
  3. 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: Renewable energy sources for electricity generation are unequivocally more environmentally friendly than the traditional sources, but are not impact-free. Given the potential for solar photovoltaic energy to contribute to the energy mix in some countries, it is timely to carefully consider the potential environmental costs of operation of photovoltaic farms, which are experienced by the local population, while the general benefits accrue to all. These adverse impacts should be identified and acknowledged. This paper proposes and applies economic valuation methods to estimate the value of those environmental impacts. We apply the contingent valuation method to a sample of local residents close to three selected photovoltaic farms in Portugal. We design a discrete choice experiment to elicit the valuation of specific adverse impacts of electricity generation through photovoltaic energy by national residents. Our results show that the value elicited in the vicinity of the photovoltaic farms is non-negligible and national residents value positively and differently the different adverse local impacts. Both of these estimates, in conjunction or independently, can be used to fully account for this often neglected cost of solar energy. The asymmetric equity implications of photovoltaic projects should not be neglected when deciding their construction and location.
    Keywords: Photovoltaic Farms; Stated Preference Methods; Contingent Valuation; Discrete Choice Experiments; Environmental Impacts
    JEL: Q4
    Date: 2016–12
  4. By: Nathan Kettlewell (School of Economics, UNSW Business School, UNSW)
    Abstract: This paper evaluates health insurance policy selection and how this interacts with product bundling by using a discrete choice experiment closely calibrated to the Australian private health insurance market. The experimental approach overcomes some limitations of revealed preference research in this area. The results indicate that consumers are likely to make choices that violate expected utility theory, use heuristic decision strategies, and over-insure relative to minimising out-of-pocket costs. Decision quality is significantly lower when choosing a bundled hospital/ancillaries health insurance policy (compared to stand-alone ancillaries cover), which is the policy type most consumers purchase in Australia.
    Keywords: health insurance, heuristics, choice consistency, discrete choice experiment, latent class logit
    JEL: I13 D81 D03
    Date: 2016–10
  5. By: Sylvia Frühwirth-Schnatter (Department of Applied Statistics, Johannes Kepler University Linz, Austria); Stefan Pittner; Andrea Weber; Rudolf Winter-Ebmer
    Abstract: In this paper, we study data on discrete labor market transitions from Austria. In particular, we follow the careers of workers who experience a job displacement due to plant closure and observe – over a period of forty quarters – whether these workers manage to return to a steady career path. To analyse these discrete-valued panel data, we develop and apply a new method of Bayesian Markov chain clustering analysis based on inhomogeneous first order Markov transition processes with time-varying transition matrices. In addition, a mixture-of-experts approach allows us to model the prior probability to belong to a certain cluster in dependence of a set of covariates via a multinomial logit model. Our cluster analysis identifies five career patterns after plant closure and reveals that some workers cope quite easily with a job loss whereas others suffer large losses over extended periods of time.
    Keywords: Transition data, Markov Chain Monte Carlo, Multinomial Logit, Panel data, Inhomogeneous Markov chains
    Date: 2016–09
  6. By: Bakkenbüll, Linn-Brit; Dilger, Alexander
    Abstract: This empirical study investigates whether and how much individuals are willing to pay for hosting Olympic Games in Germany. Moreover, it is examined for the first time what individuals are willing to accept to host Olympic Games in their own country if they do not like that. Furthermore, this study identifies determinants that influence the willingness to pay (WTP) including the willingness to accept (WTA) for hosting Olympic Games in Germany. WTP minus WTA is positively driven by the felt national importance of the German Olympic team doing well. Socio-economic factors such as gender, age and income influence this measure in significant ways, too. The extrapolation of the individual WTP and WTA shows that, in the net aggregate, the German population is willing to pay €3.57 billion for hosting the Olympic Games in Germany.
    Abstract: Diese empirische Studie untersucht, ob und wie viel Individuen zur Austragung Olympischer Spiele in Deutschland zu zahlen bereit sind. Zusätzlich wird erstmals ermittelt, was Individuen dafür verlangen würden, dass Olympische Spiele im eigenen Land stattfinden, wenn sie das eigentlich nicht wollen. Außerdem identifiziert diese Studie Determinanten, die die Zahlungsbereitschaft einschließlich der Kompensationsforderungen für die Austragung Olympischer Spiele in Deutschland beeinflussen. Die positive Zahlungsbereitschaft abzüglich Forderungen wird positiv beeinflusst von der gefühlten Bedeutung von deutschen Erfolge bei Olympia. Sozioökonomische Faktoren wie Geschlecht, Alter und Einkommen beeinflussen dieses Maß ebenfalls signifikant. Die Extrapolation der individuellen Zahlungsbereitschaften und Kompensationsforderungen ergibt, dass die deutsche Bevölkerung im Aggregat über eine Zahlungsbereitschaft von netto 3,57 Mrd. Euro für die Austragung von Olympischen Spielen in Deutschland verfügt.
    JEL: D12 D61 D62 H41 H43 L83 Z20 Z38
    Date: 2016

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