nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2018‒01‒29
five papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Ready for a Carbon Tax? An Explorative Analysis of University Students’ Preferences By Lucia Rotaris
  2. What Aspects of Formality Do Workers Value? Evidence from a Choice Experiment in Bangladesh By Minhaj Mahmud; Italo A. Gutierrez; Krishna B. Kumar; Shanthi Nataraj
  3. Evaluating Willingness to Pay as a Measure of the Impact of Dyslexia in Adults By Daniel Herrera-Araujo; Bennett A. Shaywitz; John M. Holahan; Karen E. Marchione; Reissa Michaels; Sally E. Shaywitz; James K. Hammitt
  4. probitfe and logitfe: Bias corrections for probit and logit models with two-way fixed effects By Mario Cruz-Gonzalez; Ivan Fernandez-Val; Martin Weidner
  5. Time-in-Labour-Market and the Reference Group By HAURET Laetitia; WILLIAMS Donald R.

  1. By: Lucia Rotaris (DEAMS, University of Trieste)
    Abstract: Greenhouse gases emissions are inexorably rising worldwide and the frequency and disruptive power of extreme weather phenomena are dramatically increasing. Although command-and-control and regulation policies have been extensively used to mitigate climate change, more effective and potentially efficient policies are needed to curb the negative externalities produced by human activities. A carbon tax could make the case, but is seldom implemented due to its assumed political unpopularity. In order to estimate the acceptability and the willingness to pay (WTP) for a carbon tax, a contingent valuation experiment was administered in USA and in Italy to a sample of 150 university students. The research is innovative both for the topic chosen, since there are no studies testing the WTP for a carbon tax in the Italian context nor comparing it with the estimates obtained for other countries, and for the methodology used to estimate the WTP, making use of random parameters logit models to obtain individual specific estimates of the median WTP. The results show that the median WTP ranges between a minimum of $161 and a maximum of $242, and varies according to the purposes proposed for the tax revenue use, the respondents’ beliefs and knowledge about climate change, and some sociodemographic characteristics of the respondents (age, gender, and political affiliation). The students’ preferences seem to be quite similar when the nationality of the respondents is taken into account.
    Keywords: Carbon Tax, Willingness to Pay, University Students, Climate Change
    JEL: H31 Q58
    Date: 2017–12
  2. By: Minhaj Mahmud; Italo A. Gutierrez; Krishna B. Kumar; Shanthi Nataraj
    Abstract: In this study, we use a choice experiment to elicit workers' willingness to pay (WTP) for specific job benefits typically associated with formal employment (contracts, termination notice, paid leave, preferred working hours, and access to a retirement account). We find that workers most value job stability: the average worker would be willing to give up 19 percent of monthly income for a 6-month contract, 27 percent for a 1-year contract and 44 percent for a permanent contract (relative to no contract). Thirty days' of termination notice would also be valued at about 12 percent of monthly income. Using a latent class model, we explore preference heterogeneity and find that government workers are more likely to place a higher value on long-term contracts than private sector employees, while casual workers are more likely to have a particularly strong preference for higher salary, and a relatively low WTP for various benefits. This heterogeneity may be driven by sorting or loss aversion. Our work also lends support to the use of choice experiments to overcome the challenges associated with estimating WTP for specific job benefits from hedonic wage regressions or from observed job durations.
    Date: 2017–07
  3. By: Daniel Herrera-Araujo (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Bennett A. Shaywitz (Yale University School of Medicine - Yale School of Medicine); John M. Holahan (Yale University School of Medicine - Yale School of Medicine); Karen E. Marchione (Yale University School of Medicine - Yale School of Medicine); Reissa Michaels (Yale University School of Medicine - Yale School of Medicine); Sally E. Shaywitz (Yale University School of Medicine - Yale School of Medicine); James K. Hammitt (Harvard University [Cambridge], TSE - Toulouse School of Economics - Toulouse School of Economics)
    Abstract: While much is known about dyslexia in school-age children and adolescents, less is known about its effects on quality of life in adults. Using data from the Connecticut Longitudinal Study, we provide the first estimates of the monetary value of improving reading, speaking, and cognitive skills to dyslexic and nondyslexic adults. Using a stated-preference survey, we find that dyslexic and nondyslexic individuals value improvements in their skills in reading speed, reading aloud, pronunciation, memory, and information retrieval at about the same rate. Because dyslexics have lower self-reported levels on these skills, their total willingness to pay to achieve a high level of skill is substantially greater than for nondyslexics. However, dyslexic individuals’ willingness to pay (averaging $3000 for an improvement in all skills simultaneously) is small compared with the difference in earnings between dyslexic and nondyslexic adults. We estimate that dyslexic individuals earn 15% less per year (about $8000) than nondyslexic individuals. Although improvements in reading, speaking, and cognitive skills in adulthood are unlikely to eliminate the earnings difference that reflects differences in educational attainment and other factors, stated-preference estimates of the value of cognitive skills may substantially underestimate the value derived from effects on lifetime earnings and health.
    Date: 2017–07
  4. By: Mario Cruz-Gonzalez; Ivan Fernandez-Val; Martin Weidner
    Abstract: We present the Stata commands probitfe and logitfe, which estimate probit and logit panel data models with individual and/or time unobserved effects. Fixed effect panel data methods that estimate the unobserved effects can be severely biased because of the incidental parameter problem (Neyman and Scott, 1948). We tackle this problem by using the analytical and jackknife bias corrections derived in Fernandez-Val and Weidner (2016) for panels where the two dimensions ($N$ and $T$) are moderately large. We illustrate the commands with an empirical application to international trade and a Monte Carlo simulation calibrated to this application.
    Date: 2016–10
  5. By: HAURET Laetitia; WILLIAMS Donald R.
    Abstract: This paper examines the relationship between the time spent in the labour market and the choice of the reference group for making relative income comparisons. The choice of reference group has been found in previous work to be an important determinant of various measures of well-being, including life-satisfaction, job-satisfaction, and satisfaction with pay. We estimate multinomial logit models of reference group determination using data from a survey of working conditions. The results suggest that a greater time spent in the labour market is associated with a higher probability of choosing local workers as the reference group for a sample of foreign ?cross-border? workers. The results are consistent with studies of immigrant workers who are hypothesized to adjust their reference group over time.
    Keywords: reference group; cross-border workers; job satisfaction
    Date: 2018–01

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