nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2017‒06‒25
four papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Unordered Monotonicity By Heckman, James J.; Pinto, Rodrigo
  2. Can money always talk? : implication for environmental compensation by international agribusiness By Zhou, Li; Lei, Lei
  3. Do Battery-Switching Systems Accelerate the Adoption of Electric Vehicles? A Stated Preference Study By Nobuyuki Ito; Kenji Takeuchi; Shunsuke Managi
  4. An Integrated General Equilibrium Model for Evaluating Demographic, Social and Economic Impacts of Transport Policies By Özhan Yılmaz; Ebru Voyvoda

  1. By: Heckman, James J. (University of Chicago); Pinto, Rodrigo (University of California, Los Angeles)
    Abstract: This paper presents a new monotonicity condition for unordered discrete choice models with multiple treatments. Unlike a less general version of monotonicity in binary and ordered choice models, monotonicity in unordered discrete choice models along with other standard assumptions does not necessarily identify causal effects defined by variation in instruments, although in some cases it does. Our condition implies and is implied by additive separability of the choice equations in terms of observables and unobservables. These results follow from properties of binary matrices developed in this paper. We investigate conditions under which Unordered Monotonicity arises as a consequence of choice behavior. We represent IV estimators of counterfactuals as solutions to discrete mixture problems.
    Keywords: instrumental variables, monotonicity, revealed preference, Generalized Roy Model, binary matrices, discrete choice, selection bias, identification, discrete mixtures
    JEL: I21 C93 J15
    Date: 2017–06
  2. By: Zhou, Li; Lei, Lei
    Abstract: With the development of agricultural industrialization, the environmental issues of intensive animal farming are attracting increasing attention. Using survey data from 313 Chinese households living near the large-scale broiler farms of an international food company, this paper employs a contingent valuation method and discrete choice experiment to quantify the willingness to accept an air pollution compensation scheme. We find the following. (1) 42% of respondents have a nonmonetary preference for compensation; thus, the conventional contingent valuation method is unsuitable for application to them. (2) The results of a probit and tobit model show that in addition to income, “trust and perception” dominate decision-making based on willingness to accept; however, the effect of actual distance is weak. (3) Because of the positive externalities of roads, schools, and job opportunities, the combination of nonmonetary options is feasible and beneficial for both sides (the company and households) in the long term. Thus, from the perspective of the global value chain, it is worth studying nonmonetary compensation strategies in order to explore the sustainable development strategies of multinational corporations.
    Keywords: Agricultural economics,Poultry,Agriculture,Globalization,Willingness to accept,CVM,Choice experiment,Global value chain,Pollution,China
    JEL: F23 Q12 Q51
    Date: 2017–04
  3. By: Nobuyuki Ito (Center for the Promotion of Interdisciplinary Education and Research, Kyoto University); Kenji Takeuchi (Graduate School of Economics, Kobe University); Shunsuke Managi (Urban Institute & School of Engineering, Kyushu University)
    Abstract: We estimate willingness-to-pay (WTP) for battery-switching electric vehicles (SEVs) by using a stated choice experiment. Our estimation results show that individuals have high WTP for SEVs, provided sufficient battery-switching stations exist. When battery-switching infrastructure represents 50% of the current number of gasoline stations, individuals are indifferent between conventional gasoline vehicles and SEVs, which have a 521 thousand yen lower price than gasoline vehicles. Moreover, the estimation results suggest that vehicle drivers may recognize SEVs as vehicles for shorter drives such as daily shopping trips and thereby have lower marginal WTP with respect to cruising range.
    Keywords: electric vehicle, battery-switching stations, stated preference method, choice experiment, willingness-to-pay
    JEL: L62 Q42 Q51
    Date: 2016–11
  4. By: Özhan Yılmaz (PhD Candidate, Department of Economics, Middle East Technical University, Ankara, Turkey); Ebru Voyvoda (Department of Economics, Middle East Technical University, Ankara, Turkey)
    Abstract: Under the legacy of dominant transport appraisal approach, which mainly relies on traditional cost-benefit assessment (CBA) analyses, candidate policies and associated projects are evaluated in a way to take primarily aggregate information into account. Although it is practical to use these methods, working with aggregate values leaves every kind of disparities aside and individual level information is lost in aggregation. This means that we need better economic models doing more than reducing outcomes of evaluated policies to numerical aggregates and averages. This study proposes a hybrid approach to grasp the heterogeneity among different agents and to endogenise interactions among different markets. A discrete choice theory-based household residential location and transport mode choice model and a traffic equilibrium model based on Wardrop’s principles are embedded in a traditional computable general equilibrium (CGE) model representing a closed urban economy. This requires fully integrating three different models (economic model, household location and mode choice model, traffic equilibrium model) using a single mathematical framework. The proposed integrated model is tested using pseudo data of a city with four districts where connection between districts are provided through two-way roads passing through a central district. Households are categorised according to their residential location, working location, preferred commuting mode and social status. Different types of transport policies (i.e. capacity increase in private transport, public transport improvement) are evaluated and impacts of these policies on such parameters like household distribution, households’ demands on consumption goods and housing, housing prices are analysed.
    Keywords: Wider economy impacts, Transport Policy, Computable General Equilibrium, Discrete Choice Model
    JEL: C68 R21 R41
    Date: 2017–06

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