nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2017‒01‒08
seven papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Valuation of coral reefs using site choice model By Katsuhito Nohara; Azusa Okagawa; Akira Hibiki; Hiroya Yamano
  2. Policy- v. Individual Heterogeneity in the Benefits of Climate Change Mitigation: Evidence from a Stated-Preference Survey By Alberini, Anna; Ščasný, Milan; Bigano, Andrea
  3. Priorities and preferences in the implementation of the European Water Framework Directive - A case study of the river Alsterån By Ek, Kristina; Persson, Lars
  4. A tour of regression models for explaining shares By Morais, Joanna; Simioni, Michel; Thomas-Agnan, Christine
  5. Transport's demand in the Metropolitan Region of São Paulo and urban toll policy as a measure to reduce congestion By Tainá Souza Pacheco; André Luis Squarize Chagas
  6. Quantifying Retail Agglomeration using Diverse Spatial Data By Duccio Piovani; Vassilis Zachariadis; Michael Batty
  7. Demand for Off-Grid Solar Electricity: Experimental Evidence from Rwanda By Grimm, Michael; Lenz, Luciane; Peters, Jörg; Sievert, Maximiliane

  1. By: Katsuhito Nohara; Azusa Okagawa; Akira Hibiki; Hiroya Yamano
    Abstract: The coral reef ecosystems provide many goods and services to coastal populations, such as tourism. Furthermore, they form a unique natural ecosystem, with an important biodiversity value as well as scientific and educational value. They also form a natural protection against wave erosion. However, they have been damaged due to red soil erosion and global warming. Therefore, the preservation of coral reefs has been an important policy issue. The cost benefit analysis of the policy is important to choose cost-effective policy. A few studies have evaluated the economic value of coral reefs in Okinawa prefecture, Japan, but most of them have applied contingent valuation method. The purpose of this study is to estimate the value of coral reefs which tourists to Okinawa prefecture obtain using discrete choice travel cost method. We implemented an on-site survey to tourists to Okinawa at Naha airport, Ishigaki airport, Miyako airport and Kumejima airport on November 8th to 11th in 2013 and collected 410 responses. A total of 163 responses were excluded from data analysis because they were not fully completed. We applied conditional logit model to tourist?s decision to select his/her destination and estimate the model using collected data. Based on the conditional logit model, the hypothesis of Independence from Irrelevant Alternatives (IIA) cannot be rejected. We also tried to apply mixed logit model to our data but there was no significant difference between random parameters and not random ones. The main findings are willingness to pay by a tourist for coral reefs is 4,754 yen/km2 per a day and16,544 yen/km2 per trip.
    Keywords: the value of coral reefs; discrete choice travel cost method; marginal willingness to pay
    Date: 2016–12
  2. By: Alberini, Anna; Ščasný, Milan; Bigano, Andrea
    Abstract: The implementation of decarbonization policies depends crucially on the public’s willingness to pay for them. We use stated preference methods to investigate the public’s preferences for such policies. We ask three research questions. First, does the willingness to pay (WTP) for each ton of CO2 emissions reductions depend on the policies and on individual characteristics of the respondents? Second, how extensive is the variation associated with these factors? Third, what factors affect support for or opposition to a carbon tax? Based on the responses to discrete choice experiments from a sample of Italians, we find that the WTP per ton of CO2 ranges between € 6 and 130, depending on whether the public program is based on taxes, incentives, information-based approaches or standards. Further allowing for individual characteristics of the respondents, such as gender or education, and knowledge of climate change, results in a 300% change in WTP, holding the policy instrument the same. We conclude that the variation associated with the policy instrument is approximately of the same order of magnitude as that associated with individual characteristics of the respondents.
    Keywords: Climate Change Mitigation, WTP per ton of CO2 Emissions Reduced, Choice Experiments, Environmental Economics and Policy, Q41, Q48, Q54, Q51,
    Date: 2016–12–23
  3. By: Ek, Kristina (Luleå University of Technology, Economics unit); Persson, Lars (CERE and the Department of Economics, Umeå University)
    Abstract: This paper elicits local and semi-local citizens’ preferences for water quality attributes explicitly related to the water framework directive. A river basin in southeast of Sweden is used as a case study. The sample consists of 502 respondents living in the municipalities through which the river passes, or neighboring municipalities. By the use of a choice experiment tailored to the specific case study area, the paper analyzes public attitudes and willingness to pay for selected attributes related to water quality management. The attributes and their corresponding levels are based on real criteria for ecological water status, used in the implementation of the WFD in the river basin. Although participants live in or close to the catchment area, the results reveal a general lack of knowledge and interest in matters related to the environmental quality of the river. All attributes included in the choice experiment proved to have a statistically significant impact on the choice probabilities. There was however no significant evidence that the preferences differ between respondents with regard to self reported previous experience or knowledge about the water body, nor with regard to differences in recreational habits in the area. The results can potentially be used as inputs in practical policy making with its inevitable trade offs and priorities.
    Keywords: choice experiment; Water framework directive; water quality; willingness to pay
    JEL: Q25 Q50 Q53 Q57
    Date: 2016–12–12
  4. By: Morais, Joanna; Simioni, Michel; Thomas-Agnan, Christine
    Abstract: This paper aims to present and compare statistical modeling methods adapted for shares as dependent variables. Shares are characterized by the following constraints: positivity and sum equal to 1. Four types of models satisfy this requirement: multinomial logit models widely used in discrete choice models of the econometric literature, market-share models from the marketing literature, Dirichlet covariate models and compositional regression models from the statistical literature. We highlight the properties, the similarities and the differences between these models which are coming from the assumptions made on the distribution of the data and from the estimation methods. We prove that all these models can be written in an attraction model form, and that they can be interpreted in terms of direct and cross elasticities. An application to the automobile market is presented where we model brand market-shares as a function of media investments in 6 channels in order to measure their impact, controlling for the brands average price and a scrapping incentive dummy variable. We propose a cross-validation method to choose the best model according to different quality measures.
    Keywords: Multinomial logit; Market-shares models; Compositional data analysis; Dirichlet regression.
    JEL: C10 C25 C35 C46 D12 M31
    Date: 2016–12
  5. By: Tainá Souza Pacheco; André Luis Squarize Chagas
    Abstract: The São Paulo Metropolitan Area has been suffering for several years from enormous congestions that causes many problems, such as air and noise pollution, and productivity losses. Until now a day, the city has never had a policy to solve the causes of the problem. Automobile users cause external costs to other individuals and do not pay for it. Those who commute by car take into account only private costs, lower than the total social one, which considers also external costs. Thus, there is an excessive use of the roads and, consequently, congestion. A congestion pricing policy imposes to car users an expense as a way to internalize the costs generated to society by them. At the same time, this policy generates revenues for investment in the city's transport system. This work aims to estimate the demand of different transport modes in the São Paulo Metropolitan Area and simulate how the demand would respond to an implementation of a congestion charge for cars, in a specific area of the city. For this, we use a mixed multinomial logit model, based on Origin-Destination Research. As the variable dependent on the modal choice for commuting, we consider six different modes of transport: walking and cycling (1), buses (2), car (3), subway and train (4), taxi (5) and motorcycle (6). As explanatory variables, we use cost and time travel, besides socioeconomic characteristics of the individuals. We simulate the congestion price policy imposing an additional fee to car journeys intended to or that pass through the restricted area. Our results suggest that an urban toll would have a positive impact on reducing the number of car commuters (each $1 fee would reduce in 6.18% the demand for car commuters), increasing the number of trips in other modes, especially public transport (2.18% for buses and 1.16% for subway and train), and non-motorized transport (walking and cycling, 2.53%). As an additional benefit to public budget, the congestion charging generates revenues for the city to invest in transport infrastructure.
    Keywords: Congestion Charging; Urban Toll; Mixed Logit; Urban Travel Demand; São Paulo Metropolitan Area.
    JEL: R41 D49 C35
    Date: 2016–12–07
  6. By: Duccio Piovani; Vassilis Zachariadis; Michael Batty
    Abstract: Newly available data on the spatial distribution of retail activities in cities makes it possible to build models formalized at the level of the single retailer. Current models tackle consumer location choices at an aggregate level and the opportunity new data offers for modeling at the retail unit level lacks a theoretical framework. The model we present here helps to address these issues. It is a particular case of the Cross-Nested Logit model, based on random utility theory built with the idea of quantifying the role of floor space and agglomeration in retail location choice. We test this model on the city of London: the results are consistent with a super linear scaling of a retailer's attractiveness with its floor space, and with an agglomeration effect approximated as the total retail floorspace within a $325m$ radius from each shop.
    Date: 2016–12
  7. By: Grimm, Michael (University of Passau); Lenz, Luciane (RWI); Peters, Jörg (RWI); Sievert, Maximiliane (RWI)
    Abstract: Providing electricity to the unconnected 1.1 billion people in developing countries is one of the top political priorities of the international community, yet the costs of reaching this objective are very high. The present paper examines whether the objective and the associated costs are justified by the value that target beneficiaries assign to electricity. We provide experimental evidence on the revealed willingness-to-pay (WTP) for three types of off-grid solar electricity devices. Our findings show that households are willing to dedicate a substantial part of their expenditures to electricity. In absolute terms, though, the WTP does not suffice to reach cost-covering prices. Different payment schemes, which we randomized across our sample, do not alter the WTP significantly. If universal electricity access is to be achieved, direct subsidies might be necessary. We argue that from a public policy perspective it is more rationale to promote off-grid solar than grid-based electrification because of its better cost-benefit performance.
    Keywords: technology adoption, electrification, willingness-to-pay, real-purchase offer game, energy access
    JEL: D12 O12 O13 Q28 Q41
    Date: 2016–12

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