nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2017‒01‒22
five papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. An investigation into procedure (in)variance in the valuation of mortality risk reductions By Kjær, Trine; Nielsen, Jytte Seested
  2. Willingness-to-Pay and Free-Riding in a National Energy Efficiency Retrofit Grant Scheme: A Revealed Preference Approach By Collins, Matthew; Curtis, John
  3. The value of mortality risk reductions. Pure altruism - a confounder? By Gyrd-Hansen, Dorte; Kjær, Trine; Nielsen, Jytte Seested
  4. Effects of OTT services on consumer's willingness to pay for optical fiber broadband connection in Thailand By Sudtasan, Tatcha; Mitomo, Hitoshi
  5. Is there additional value attached to health gains at the end-of-life? A re-visit By Gyrd-Hansen, Dorte

  1. By: Kjær, Trine (COHERE); Nielsen, Jytte Seested (Newcastle University Business School)
    Abstract: This study seeks to investigate whether elicited preferences are affected by the presentation of mortality risks in a stated preference survey. A three-way split sample discrete choice experiment was conducted in which respondents were asked to express their willingness-to-pay for public risk reducing initiatives under different but outcome equivalent representation formats. Our results demonstrate that respondents exhibit much stronger preferences for public life saving interventions when these are framed in terms of avoided fatalities compared to corresponding mortality risk reductions. Furthermore, we find that less numerate respondents are more susceptible to the inclusion of the number of fatalities in the representation format. The same pattern is observed for respondents who express a higher degree of concern for a traffic accident. In conclusion our findings may justify presenting both type of risk information in valuation of mortality risk reductions in public settings.
    Keywords: Discrete choice experiment; framing; mortality risk; procedure invariance; public policy; stated preferences; willingness-to-pay
    JEL: D60 J17
    Date: 2016–04–01
  2. By: Collins, Matthew; Curtis, John
    Abstract: Understanding the drivers of energy efficient behaviour in the household can provide significant insights on how best to provide incentives for homes to engage in energy efficiency retrofits. This can have wide-reaching effects in reducing the demand for energy and in turn reducing carbon emissions. Many national grant aid schemes exist to support homes in engaging in retrofits, but these can also be availed of by free-riders, which are homes that would engage in a retrofit even in the absence of financial support. This paper explores retrofit choice, willingness-to-pay for retrofit works and free-riding in a grant aid scheme for residential energy efficiency retrofits. Household preferences are revealed through energy efficiency retrofits undertaken by Irish home owners, after having been presented with an array of retrofit measures and combinations thereof. We use a McFadden’s choice model to estimate willingness-to-pay for energy efficiency renovation works using revealed preference data (McFadden, 1984). The results of this analysis are then used to estimate the extent to which freeriding has occurred in the scheme to date. We find that less efficient and larger homes are willing to pay more for energy efficiency improvements, and find that households which had previously engaged in a retrofit via the grant scheme were willing to pay over twice as much as those retrofitting for the first time. Free-riding varies by retrofit measure, with solar collector retrofits possessing close to zero free-riders, while free-riders comprised over 33% of heating controls retrofits.
    Date: 2016–12
  3. By: Gyrd-Hansen, Dorte (COHERE); Kjær, Trine (COHERE); Nielsen, Jytte Seested (Newcastle University Business School)
    Abstract: This paper examines public valuations of mortality risk reductions. We set up a theoretical framework that allows for altruistic preferences, and subsequently test theoretical predictions through the design of a discrete choice experiment. By varying the tax scenario (uniform versus individual tax), the experimental design allows us to verify whether pure altruistic preferences are present and the underlying causes. We find evidence of negative pure altruism. Under a coercive uniform tax system respondents lower their willingness to pay possibly to ensure that they are not forcing others to pay at a level that corresponds to their own – higher – valuations. This hypothesis is supported by the observation that respondents perceive other individuals’ valuations to be lower than their own. Our results suggest that public valuations of mortality risk reductions may underestimate the true societal value because respondents are considering other individuals’ welfare, and wrongfully perceive other people’s valuations to be low.
    Keywords: Altruism; Risk reduction; Willingness-to-pay; Stated preferences
    JEL: D60 D70 I10
    Date: 2016–05–01
  4. By: Sudtasan, Tatcha; Mitomo, Hitoshi
    Abstract: Over-the-top (OTT) media and communications services are shifting internet consumption towards the increase of traffic over the internet. Since FTTH provides the highest capacity and speed of the broadband service, this paper attempts to examine the impact of OTT services to consumers to subscribe FTTH as an efficient off-load option from mobile broadband. Main research questions are whether and how OTT services affect and drive consumers to adopt optical fiber broadband. It uses fuzzy data to derive consumer's willingness to pay (WTP) for optical fiber broadband connection. The results of the study indicate that movie over internet service as an OTT service drives people to adopt and be willing to pay more for FTTH connection. The paper also discusses the policy implication on the promotion of optical fiber broadband adoption in Thailand.
    Keywords: Optical fiber,Willingness to pay,OTT services,Fuzzy data
    Date: 2016
  5. By: Gyrd-Hansen, Dorte (COHERE)
    Abstract: Researchers have in recent years sought to establish whether the general public value treatment at the end-of-life (EOL) more highly than other treatments. Results are mixed, with social preferences most often exhibiting lack of preferences for EOL treatments. This nul-result may be driven by the often applied study design, where respondents are to choose between treatments targeting patients with varying fixed life-expectancies. When remaining life is certain and salient, a rule-of-rescue sentiment may drive preferences across all scenarios. This study presents a different design, where the comparator is a preventive intervention. We study preferences from both an individual and social perspective, and find no preference for an EOL premium when age is held constant. We test the interaction between age and EOL treatment, and finder stronger preferences when patients face premature death.
    Keywords: Stated preferences; priority setting; end-of-life treatment
    JEL: D61 I13 I14 I28
    Date: 2017–01–16

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