nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2018‒08‒27
nine papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. To switch or not to switch? – Understanding German consumers’ willingness to pay for green electricity tariff attributes By Sauthoff, Saramena; Danne, Michael; Mußhoff, Oliver
  2. Protection of the Ethiopian Wolf: What are tourists willing to pay for? By Estifanos, Tafesse; Polyakov, Maksym; Pandit, Ram; Hailu, Atakelty; Burton, Michael
  3. Value of Grower Group Services to Western Australian Farmers: a Discrete Choice Experiment By Henson, Andrew F.; Rogers, Abbie A.; Gibson, Fiona L.; Burton, Michael P.
  4. You Can(’t) Always Get the Job You Want: Stated versus Revealed Employment Preferences in the Peruvian Agro-industry By Schuster, Monica; Vranken, Liesbet; Maertens, Miet
  5. Eco-certified contract choice among coffee farmers in Brazil By Lemeilleur, Sylvaine; Subervie, Julie; Presoto, Anderson Edilson; de Castro Souza, Roberta; Macchione Saes, Maria Sylvia
  6. PRIORITIZING MANAGEMENT FOCUS AREAS FOR COMMERCIAL FARMS By Holland, Jacqueline; Widmar, Nicole; Widmar, David; Gunderson, Michael
  8. Inferring Attribute Non-Attendance Using Eye Tracking in Choice-Based Conjoint Analysis By Yegoryan, Narine; Guhl, Daniel; Klapper, Daniel

  1. By: Sauthoff, Saramena; Danne, Michael; Mußhoff, Oliver
    Abstract: In order to achieve an environmentally friendly and sustainable energy supply, it is necessary that this goal is supported by society. In different countries worldwide it has been shown that one way consumers want to support the energy transition is by purchasing green electricity. However, few people make the leap from their intention to a buying decision. This study explores parameters that influence whether German consumers decide to switch to a green electricity tariff. We conducted a quota-representative online survey including a discrete choice experiment with 371 private households in Germany in 2016. For the econometric analysis, a generalized multinomial logit model in willingness to pay (WTP) space was employed, enabling the estimation of WTP values to be as realistic as possible. The results show that consumers’ decision regarding whether or not to make the switch to green energy is influenced by many underlying drivers, such as the source of green energy, whether a person can outsource the switching process, and a person’s attitude towards the renewable energy sources levy that currently exists in Germany. Implications for policy makers and recommendations for the marketing of green energy tariffs are provided.
    Keywords: Consumer/Household Economics, Environmental Economics and Policy, Institutional and Behavioral Economics
    Date: 2017
  2. By: Estifanos, Tafesse; Polyakov, Maksym; Pandit, Ram; Hailu, Atakelty; Burton, Michael
    Abstract: Ethiopian wolf, Canis simensis, is among the most threatened carnivore species in Africa. Habitat loss and disease transmission threaten its survival. Our understanding of the wolf’s contributions to ecosystem services and economic benefits of its preservation is limited because there has been insufficient research on economic valuation. This study uses choice experiments to investigate preferences and willingness to pay (WTP) for conservation programs among tourists travelling to the Bale Mountains National Park, one of the major habitats for the wolf. Program attributes valued include size of the protected area, size of the wolf population, tourist access to wolf habitat and recreational facilities. A random parameter logit model is fitted to the data to account for heterogeneity in preferences. The results show that tourists WTP is up to Ethiopian Birr 130.81 (US$ 5.82)/day/trip for enhancement of the wolf population from 200 to 250 wolves, but very little beyond that level. The visitors are willing to pay for the increase of protected area and the ease of access to the wolf habitat. Visitors WTP is significantly influenced by prior visitor experience in other protected areas in Ethiopia and interest in viewing other unique species in the park. The findings suggest that non-use values must be taken into account in decisions on the nature and magnitude of more appropriate Ethiopian wolf conservation programs.
    Keywords: Environmental Economics and Policy, Resource /Energy Economics and Policy
    Date: 2018–05–07
  3. By: Henson, Andrew F.; Rogers, Abbie A.; Gibson, Fiona L.; Burton, Michael P.
    Abstract: Grower Groups have contributed to the Western Australian agricultural research, development and extension (R, D & E) scene since their formation during the “Decade of Landcare” in the 1990s. The Grower Group (GG) approach to R, D & E has been thoroughly studied in terms of its qualitative value to farmers in Western Australia. However, the quantitative value of GG services to West Australian farmers is not yet understood. This paper attempts to determine the value of GGs to Western Australian farmers; and to better understand what GGs are doing, or need to do, to motivate farmers to become a member of these research organisations. This was conducted by surveying farmers across the state, with values inferred through the choice experiment methodology. The findings from this study demonstrate that farmers, who are currently a member of a GG, are willing to pay above current membership rates when provided with a variety of extension topics. However, there appears to be a perception amongst farmers, who are currently not a member of a GG, that research and extension coordinated by GGs will not be of any value to their farming business. The implications of these findings will be made available to GGs to assist them in improving their services and relevance in the agricultural industry.
    Keywords: Agribusiness, Farm Management, Research and Development/Tech Change/Emerging Technologies, Teaching/Communication/Extension/Profession
    Date: 2018–03–29
  4. By: Schuster, Monica; Vranken, Liesbet; Maertens, Miet
    Abstract: Employment in high-value agro-export sectors has been recognized to entail the potential to contribute to poverty reduction in rural areas of developing countries. Concerns have yet been raised about the quality of the created employment and worker preferences have often been overlooked in the literature. We use a discrete choice experiment, in which we relate stated and revealed employment preference of agro-industrial export workers in Peru. We explain employment (mis)matches as a function of personal and employer characteristics. Results suggest that employment preferences are heterogeneous, but that labor market frictions are smaller than what is commonly expected in developing country contexts.
    Keywords: Agribusiness
    Date: 2017
  5. By: Lemeilleur, Sylvaine; Subervie, Julie; Presoto, Anderson Edilson; de Castro Souza, Roberta; Macchione Saes, Maria Sylvia
    Abstract: We survey Brazilian coffee farmers’ preferences for attributes of voluntary sustainability standards using a choice experiment. We collected original data from 250 coffee farmers who live in the state of Minas Gerais who were asked to choose from several hypothetical buying contracts for eco-certified coffee. Our results suggest that both cash and non-cash payments may motivate farmers to participate in sustainability standard certification schemes that require improved agricultural practices. Preferences for non-cash rewards such as long-term formal contracts or technical assistance, however, appear highly heterogeneous. Results more-over show that the minimum willingness-to-accept for the adoption of composting is twice as high as the maximum price premium for certified coffee in the current context, which may partly explain why most coffee farmers continue to be reluctant to enter the most stringent eco-certification schemes such as the organic standard. French abstract : Dans cet article, nous étudions les préférences des producteurs de café brésiliens pour les attributs des standards volontaires de durabilité, par une méthode d’expérimentation des choix. Nous avons collecté des données originales auprès de 250 producteurs de café de l'État du Minas Gerais, invités à choisir parmi plusieurs contrats d'achat hypothétiques exigeant l'amélioration des pratiques agricoles. Nos résultats suggèrent que les paiements monétaires et non monétaires peuvent inciter les agriculteurs à participer à des standards de durabilité certifiés. Néanmoins, les préférences pour les récompenses non monétaires, tels que les contrats formels de long terme ou l’assistance technique, apparaissent très hétérogènes. De plus, les résultats montrent que la prime de consentement à adopter le compost comme moyen de fertilisation est deux fois plus élevé que la prime maximum actuelle pour le café certifié. Ceci peut expliquer en partie la raison pour laquelle la plupart des producteurs de café continuent d'être réticents à entrer dans des systèmes de certification exigeant comme le standard d’agriculture biologique.
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy, Land Economics/Use
    Date: 2016–10
  6. By: Holland, Jacqueline; Widmar, Nicole; Widmar, David; Gunderson, Michael
    Abstract: Farm management is a series of complex processes incorporating a variety of dynamic factors, including biological production systems, resource allocation and management, and the management of increasingly complex financial and economic systems. Farm managers are constantly required to prioritize and allocate management effort and attention amongst these factors and evaluate tradeoffs. This analysis elicited from commercial producers the relative ranking of five critical farm management focus areas, namely, managing production; managing land, equipment, and facilities; controlling costs; managing output prices; and managing people. Out of a total of 2,247 commercial farms in this study, the largest mean shares of importance were placed on controlling costs (28.6%) and managing production (27.3%). Producers, on average, emphasized the management areas of controlling costs and managing production, relative to managing land, equipment, and facilities; managing people; and managing output prices, for farm success. Correlations between the farm management focus areas studied were estimated from producer-specific share of importance estimates resulting from a random parameters logit model; the strongest correlation observed was the negative relationship between managing production and controlling costs. Implications for self-identified success factors, or critical areas of management focus, of commercial farms are far reaching, potentially influencing sales, marketing, and decision support for these operations, as well as driving research and programmatic focus to provide relevant information to these producers moving forward.
    Keywords: Farm Management
    Date: 2016–10
  7. By: Charity, Nabwire Ephamia Juma
    Abstract: Geographical indication (GI) identifies a product as originating from a given territory, region or country. This form of product-labelling signifies reputation for quality, safety and authenticity. It is a form of value-based label that can curb honey adulteration through enabling product traceability. This study analyzed honey consumers’ awareness of GI and their willingness to pay for quality attributes of honey in Kenya. A quantitative experimental research design; choice experiment (CE) based on a D-optimal design was used. Primary data was collected through consumer surveys using structured questionnaires. Respondents were drawn from three urban centres: Nairobi, Nakuru and Kitui. In addition, consumers’ awareness and preferences for geographical and quality honey attributes were analyzed using probit and random parameter logit models, respectively. Results reveal that consumers have limited knowledge of GI. Factors that influence GI awareness are consumers’ perceptions, trust, gender, education level and information. Therefore, there is need to increase the spread of GI knowledge and its benefits through consumer education forums. Furthermore, consumers prefer local honey that is organic, with specific origin labels and produced in semi-arid areas. The study therefore recommends stringent labelling of honey with its specific region of origin and organic certification. Consequently, consumers are willing to pay a premium to improve the authenticity of current honey labels: origin and botanical labels for traceability and organic for food safety. Consumers also prefer a joint public-private regulation. There is a niche market for thick honey labelled with its GI, organic, botanical source and certified by both public and private body. This consumer segment would pay up to 430% premium. This study recommends for consumer education across gender and age and implementation of GI labelling for food products trusted by consumers. Stakeholders should be enabled to implement GI labels in Kenya because of high consumer preferences.
    Keywords: Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety
    Date: 2016–11–11
  8. By: Yegoryan, Narine (Humboldt University Berlin); Guhl, Daniel (Humboldt University Berlin); Klapper, Daniel (Humboldt University Berlin)
    Abstract: Traditionally, the choice-based conjoint analysis relies on the assumption of rational decision makers that use all available information. However, several studies suggest that people ignore some information when making choices. In this paper, we build upon recent developments in the choice literature and employ a latent class model that simultaneously allows for attribute non-attendance (ANA) and preference heterogeneity. In addition, we relate visual attention derived from eye tracking to the probability of ANA to test, understand, and validate ANA in a marketing context. In two empirical applications, we find that a) our proposed model fits the data best, b) the majority of respondents indeed ignores some attributes, which has implications for willingness-to-pay estimates, segmentation, and targeting, and c) even though the latent class model identifies ANA well without eye tracking information, our model with visual attention helps to better understand ANA by also accounting for differences in attribute processing patterns.
    Keywords: attribute non-attendance; eye tracking; discrete choice modeling; choice-based conjoint analysis;
    Date: 2018–08–03
  9. By: Mutanyagwa, Ange Pacifique
    Abstract: Improved maize seed varieties are bred with characteristics such as drought and disease tolerance which may not capture farmers’ preference. It is therefore, imperative to consider attributes that are preferred by farmers in developing maize seed varieties. This research was conducted to determine attributes that are most preferred by smallholder maize farmers in Tanzania. Specifically, the study aimed to (i) characterize smallholder farmers’ preferences for improved maize seed varieties depending on their socio-economic characteristics, (ii) assess the heterogeneity of farmers’ preferences for improved maize seed varieties and (iii) determine factors that influence farmers’ choice of the most preferred improved maize seed varieties. Descriptive statistics and binary logistic regression were used for data analysis. The study findings revealed that majority (74.7%) of the households were male-headed and (83%) were married. About 90 percent of the farmers had no access to extension services that is supposed to play an important role in agricultural information dissemination. The most preferred improved maize varieties in all zones were PAN6549, SC 627, SC 713, STAHA, KILIMA and DK 8371due to higher production potential. A Logit model showed that agro-ecological zones, farm size, household size and yield positively influenced the likelihood of farmers’ choice of improved maize seed varieties. Based on these findings, it is recommended that researchers and suppliers of seed should consider the attributes of farmers’ preference in the production of improved maize seeds and put more emphasis on facilitating the delivery of agricultural extension services for more effective uptake of agricultural technologies.
    Keywords: Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies
    Date: 2017

This nep-dcm issue is ©2018 by Edoardo Marcucci. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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