nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2018‒09‒03
eleven papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Willingness to pay for health insurance in the informal sector of Sierra Leone By Jofre-Bonet, Mireia; Kamara, Joseph
  2. An empirical analysis of green energy adoption among residential consumers in Poland By Anna Kowalska-Pyzalska
  3. A Belief-Preference Model of Choice for Experience and Credence Goods By Costanigro, Marco; Onozaka, Yuko
  4. Consumers’ attitudes on carbon footprint labelling. Results of the SUSDIET project By Feucht, Yvonne; Zander, Katrin
  5. Public willingness to pay for carbon farming and its co-benefits By Kragt, Marit E.; Gibsona, Fiona L.; Maseyk, Fleurk; Wilson, Kerrie A.
  6. Household willingness to pay for green electricity in Poland By Anna Kowalska-Pyzalska; David Ramsey
  7. Objectives’ alignment between members and agricultural cooperatives By Bareille, François; Bonnet-Beaugrand, Florence; Duvaleix-Treguer, Sabine
  8. One-off subsidies and long-run adoption – Experimental evidence on improved cooking stoves in Senegal By Bensch, Gunther; Peters, Jörg
  9. Farm heterogeneity and agricultural policy impacts on size dynamics: evidence from France By Saint-Cyr, Legrand D. F.
  10. Cumulative attraction and spatial dependence in a destination choice model for beach recreation By Phillips,Yvonne
  11. Estimation in a Generalization of Bivariate Probit Models with Dummy Endogenous Regressors By Sukjin Han; Sungwon Lee

  1. By: Jofre-Bonet, Mireia; Kamara, Joseph
    Abstract: Purpose The objective of this project is to study the willingness to pay (WTP) for health insurance (HI) of individuals working in the informal sector in Sierra Leone, using a purposely-designed survey of a representative sample of this sector. Methods We elicit the WTP using the Double-Bounded Dichotomous Choice with Follow Up method. We also examine the factors that are positively and negatively associated with the likelihood of the respondents to answer affirmatively to joining a HI scheme and to paying three different possible premiums, to join the HI scheme. We additionally analyze the individual and household characteristics associated with the maximum amount the household is willing to pay to join the HI scheme. Results The results indicate that the average WTP for the HI is 20,237.16 SLL (3.6 USD) per adult but it ranges from about 14,000 SLL (2.5 USD) to about 35,000 SLL (6.2 USD) depending on region, occupation, household and respondent characteristics. The analysis of the maximum WTP indicates that living outside the Western region and working in farming instead of petty trade are associated with a decrease in the maximum premium respondents are WTP for the HI scheme. Instead, the maximum WTP is positively associated to being a driver or a biker; having secondary or tertiary education (as opposed to not having any); the number of pregnant women in the household; having a TV; and, having paid for the last medical requirement. Conclusions In summary, the various analyses show that a premium for the HI package could be set at approximately 20,000 SLL (3.54 USD) but also that establishing a single premium for all individuals in the informal sector could be risky. The efficient functioning of a HI scheme relies on covering as much of the population as possible, in order to spread risks and make the scheme viable. The impact of the various population characteristics raises the issue of how to rate premiums. In other words, setting a premium that may be too high for a big proportion of the population could mean losing many potential enrollees and might have viability consequences for the operation of the scheme.
    JEL: J1
    Date: 2018–05–16
  2. By: Anna Kowalska-Pyzalska
    Abstract: This paper investigates the acceptance of green electricity among Polish residential consumers. Our focus was on the socio-economic and environmental attributes of consumers in terms of their willingness to adopt renewable energy sources (RES) and green electricity tariffs. In particular, this study explores the determinants of adoption by examining consumers' willingness to pay (WTP) for green electricity, willingness to switch to green electricity tariffs, and willingness to install small-scale generators in the household. The hypotheses were tested empirically with data collected by means of a standardized telephone survey of 502 household electricity consumers in Poland. Most Polish people accept and support the development of RES, but they do not know how to contribute to this process. Their WTP increases with income, education, pro-environmental attitudes, and knowledge. They also care about social influence. To increase the adoption rate of RES among residential consumers, stable legal regulations, clear procedures, subsidies, social campaigns, and educational trainings are needed. We believe that the findings from this study may be valuable for those involved in marketing green electricity offers and for politicians responsible for the increase of the share of renewables in the Polish power system.
    Keywords: Renewable energy sources; Green electricity tariffs; Consumer adoption; WTP; Prosumers; Social influence; Environmental attitudes; Questionnaire survey
    JEL: D12 D90 Q20 Q42 Q48 Q56
    Date: 2018–04–27
  3. By: Costanigro, Marco; Onozaka, Yuko
    Abstract: We develop a methodology addressing the issue of confounded beliefs and preferences in models of discrete choice. First, we formalize the theoretical framework and logical underpinnings of a belief-preference model of choice for experience and credence goods, where subjective beliefs relate to uncertain product quality. Then, we present the experimental procedure within the context of an online choice experiment studying consumer food preferences. The empirical strategy leverages information from a quality sorting task to identify and estimate beliefs, while choice data are used to recover preferences. By conditioning product choices on predicted quality perceptions, the issue of endogenous beliefs is resolved.
    Keywords: Institutional and Behavioral Economics
    Date: 2018
  4. By: Feucht, Yvonne; Zander, Katrin
    Abstract: The purchase of products labelled with Carbon footprints is one option for consumers to act climate-friendly and consumers frequently state that they are interested in this kind of labels. But even though various carbon footprint labelling schemes exist throughout Europe, their market relevance is low. In this context, the present research investigates preferences for climate-friendly food and identifies barriers for climate friendly food choices in the European market. Using a mixed methods approach combining an online survey (choice experiments and a questionnaire) with qualitative face-to-face interviews, the preferences and willingness to pay for different carbon labels and a climate-friendly claim were explored in six European countries. While the online survey mainly aimed at eliciting consumer preferences for different ways of communicating climate-riendliness, the face-to-face interviews which were based on the results of the online survey, deepened and broadened the quantitative results. Thereby, consumers’ perceptions of climate-friendly food and their information needs with respect to climate-friendly food are elicited. Our results show that the presence of a carbon label on a product increases the purchase probability and that consumers are willing to pay a (small) price premium for a carbon label in all countries under investigation (France, Germany, Italy, Norway, Spain, Germany, UK). However, the contribution of a carbon label to a more climate-friendly consumption will be limited. Main reasons are the lack of knowledge of climate friendly actions, reluctance to change consumption habits (e.g. meat and dairy consumption), time preference and uncertainty regarding the relevance of climate change. Consumers appear to be frequently overstrained with respect to climate-friendly buying decisions. Policy makers and retailers are challenged to set appropriate structures to support climate-friendly consumption.
    Keywords: Agricultural and Food Policy, Crop Production/Industries
    Date: 2017
  5. By: Kragt, Marit E.; Gibsona, Fiona L.; Maseyk, Fleurk; Wilson, Kerrie A.
    Abstract: Governments worldwide have implemented climate change mitigation policies that aim to encourage abatement by changing agricultural practices. In Australia, farmers can gain carbon credits for sequestering carbon or reducing emissions. In addition to mitigation, these 'carbon farming' activities often generate ancillary (co-)benefits, such as creating native habitat or preventing erosion. This paper presents results of an Australia-wide choice experiment, conducted to estimate community values for climate change mitigation and the co-benefits of carbon farming. Values for carbon farming benefits are shown to depend on respondent’s opinions about climate change. Respondents who do not believe that climate change is happening have a lower willingness to pay for reducing Australia’s greenhouse gas emissions than people who believe climate change is (at least partly) caused by human actions. On average, respondents’ were willing to pay $1.13/Mt of CO2-e reduction. Respondents were willing to pay around $19/ha increase in the area of native vegetation on farmland. Value estimates for reducing soil erosion were not significant. Our results demonstrate that the community benefits from carbon farming extend beyond their effects on climate change mitigation. Future policies should take these positive values for co- benefits into account.
    Keywords: Environmental Economics and Policy
    Date: 2018–08–20
  6. By: Anna Kowalska-Pyzalska; David Ramsey
    Abstract: This paper analyses the willingness to pay (WTP) for green electricity among residential consumers in Poland. The current share of renewable energy sources (RES) in energy consumption is around 13.5% and is expected to increase. Data were collected through a telephone survey of a representative sample of Poles. The results obtained indicate that - above all - age, income, environmental attitudes, peer support, but also, education and knowledge about RES play the most important role in explaining consumers' WTP for green electricity. Statistical analyses indicate that the mean WTP of Polish consumers is currently very low (around 0.5 USD), which is due to the relatively low GDP per capita, the lack of knowledge about green energy and no past experience with green electricity tariffs.
    Keywords: Green energy; Green electricity tariffs; Willingness to pay; Telephone survey; Contingent valuation method (CVM); Logit regression
    JEL: D12 D90 Q20 Q42 Q48 Q56
    Date: 2018–07–12
  7. By: Bareille, François; Bonnet-Beaugrand, Florence; Duvaleix-Treguer, Sabine
    Abstract: Members’ commitment lessens when agricultural cooperatives grow larger. Their organization becomes more complex and their membership more heterogeneous, which threatens their sustainability and leads them to implement specific mechanisms for collective decisions. We explore how the alignment of objectives between a multi-purpose cooperative and its members influences member commitment. We estimate a multinomial probit model on a cross-section sample of 3,205 members from a large agricultural cooperative in France. We assess the determinants of member commitment through four factors: the offer of new agricultural practices, the availability of outlets and supplies to members, the farm distance to the cooperative headquarters and the farm governance. We show that the adoption of new agricultural practices has a small but significant effect. The availability of outlets and supplies has the strongest effect on the economic involvement of the farmers. Other determinants, such as farm governance or geographical distance to the cooperative headquarters, also reinforce member commitment.
    Date: 2017–05–23
  8. By: Bensch, Gunther; Peters, Jörg
    Abstract: Free distribution of a technology can be an effective development policy instrument if its adoption is socially inefficient and hampered by affordability constraints. Improved cookstoves may be such a case: they generate high environmental and public health returns, but adoption is generally low. Based on a randomized controlled trial in rural Senegal, this paper studies whether one-time free cookstove distribution affects households’ willingness to pay (WTP) in the long run. Effects might be negative because people anchor their WTP on the earlier zero price (reference dependence) or positive because information deficits about potential benefits are overcome. We find that households who received a free stove six years back exhibit a higher WTP today compared to control households. Potential reference dependence effects are thus at least compensated by learning effects. Our findings suggest that one-time free distribution does not spoil future prices and might even be a stepping stone for future market establishment.
    Keywords: Consumer/Household Economics, Demand and Price Analysis, Resource /Energy Economics and Policy
    Date: 2017–04–04
  9. By: Saint-Cyr, Legrand D. F.
    Abstract: This article investigates the impact of agricultural policies on structural change in farming. Since not all farmers may behave alike, a non-stationary mixed-Markov chain modeling (M-MCM) approach is applied to capture unobserved heterogeneity in the transition process of farms. A multinomial logit specification is used for transition probabilities and the parameters are estimated by the maximum likelihood method and the Expectation-Maximization (EM) algorithm. An empirical application to an unbalanced panel dataset from 2000 to 2013 shows that French farming mainly consists of a mixture of two farm types characterized by specific transition processes. The main finding is that the impact of farm subsidies from both pillars of the Common Agricultural Policy (CAP) highly depends on the farm type. A comparison between the non-stationary M-MCM and a homogeneous non-stationary MCM shows that the latter model leads to either overestimation or underestimation of the impact of agricultural policy on change in farm size. This suggests that more attention should be paid to both observed and unobserved farm heterogeneity in assessing the impact of agricultural policy on structural change in farming.
    Keywords: Farm Management
    Date: 2017–06–23
  10. By: Phillips,Yvonne
    Abstract: Beach recreation value is an important consideration in a cost-benefit analysis of coastal development or conservation. A destination choice-based travel cost analysis is often used to quantify recreation values but the destination choice only partially reflects the intrinsic characteristics of that site. Visitors are influenced by opportunities available at other sites and can visit multiple sites resulting in spatially correlated errors. For this study about the recreation value of beaches on the Coromandel Peninsula we draw on the theory of cumulative attraction to analyse the compatibility of different beaches for the multiple-destination visitors who comprise more than half our sample. We investigate different random utility model formulations to explain destination choice and find that a cross-nested logit with sites nested by availability of amenities explains the observed patterns of visitation well and is more computationally efficient that non-closed-form models such as mixed logit. We also include inverse distance variables to the nearest amenity of each type and their significance supports the tenet of cumulative attraction that the importance of other spaces is greater when the attributes differ. Overall beach recreation values are maximised when sites are diverse in terms of development level and type.
    Keywords: Community/Rural/Urban Development, Consumer/Household Economics, Environmental Economics and Policy, Research Methods/ Statistical Methods, Risk and Uncertainty
    Date: 2016–08–25
  11. By: Sukjin Han; Sungwon Lee
    Abstract: The purpose of this paper is to provide guidelines for empirical researchers who use a class of bivariate threshold crossing models with dummy endogenous variables. A common practice employed by the researchers is the specification of the joint distribution of the unobservables as a bivariate normal distribution, which results in a bivariate probit model. To address the problem of misspecification in this practice, we propose an easy-to-implement semiparametric estimation framework with parametric copula and nonparametric marginal distributions. We establish asymptotic theory, including root-n normality, for the sieve maximum likelihood estimators that can be used to conduct inference on the individual structural parameters and the average treatment effect (ATE). In order to show the practical relevance of the proposed framework, we conduct a sensitivity analysis via extensive Monte Carlo simulation exercises. The results suggest that the estimates of the parameters, especially the ATE, are sensitive to parametric specification, while semiparametric estimation exhibits robustness to underlying data generating processes. In this paper, we also show that the absence of excluded instruments may result in identification failure, in contrast to what some practitioners believe.
    Date: 2018–08

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