nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2018‒10‒01
nine papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Consumer preferences and willingness to pay for Aflatoxin- Free Milk in Pakistan By Abedullah, A.; Kouser, S.; Ibrahim, M.
  2. Impact of beliefs about negative effects of wind turbines on preference heterogeneity regarding renewable energy development in Poland By Anna Bartczak; Wiktor Budziński; Bernadeta Gołębiowska
  3. Heterogeneous Preferences for Urban Forest Attributes: A Latent Class Approach By Alvarez, Sergio; Soto, Jose; Escobedo, Francisco; Lai, John; Adams, Damian
  5. Calculating Willingness to Pay in Mixed Logit Models By Shonkwiler, J. Scott; Ying, Jiahui
  6. The effect of the number of alternatives in choice experiment questions By Weng, Weizhe; Morrison, Mark; Boyle, Kevin J.; Boxall, Peter C.
  7. Estimating grouped data models with a binary dependent variable and fixed effects: What are the issues By Nathaniel Beck
  8. The Impact of Consumer Heterogeneity and Surrounding Amenities in Determining Traveler Behavior: A Choice Experiment on Agritourism By Van Sandt, Anders T.; Costanigro, Marco; Thilmany McFadden, Dawn D.
  9. Distance Metric or Random Coefficients Logit? A Comparison of Product-level Demand Models Using Chinese Instant Noodle Scanner Data By Chen, Yu; Zhen, Chen

  1. By: Abedullah, A.; Kouser, S.; Ibrahim, M.
    Abstract: Aflatoxins are highly toxic compounds in milk and pose serious risks to human health. Past studies have observed high concentration of aflatoxin in raw milk of Pakistan. Nonetheless, this study contributes by investigating consumers’ demand for aflatoxin-free raw milk. For this purpose, we conducted a discrete choice experiment with a random sample of 360 households drawn from three mega cities of Punjab province. Random parameter logit and latent class models are used to incorporate preference heterogeneity in the stated choice analysis. Empirical findings suggest that consumers want to pay a highest premium for milk having low concentration of aflatoxin. Based on these findings, we suggest that there is considerable scope for the rapid development of aflatoxin-free raw milk, even though it is marketed at prices that are significantly higher than current milk prices.
    Keywords: Agricultural and Food Policy, International Development, Livestock Production/Industries
    Date: 2018–07
  2. By: Anna Bartczak (University of Warsaw, Faculty of Economic Sciences); Wiktor Budziński (University of Warsaw, Faculty of Economic Sciences); Bernadeta Gołębiowska (University of Warsaw, Faculty of Economic Sciences)
    Abstract: We investigate individuals’ preferences for renewable energy development in Poland. Our main objective is to examine whether preferences for avoiding externalities from renewable energy development near respondents’ place of residence are influenced by their personal beliefs about the negative effects of wind turbine activity. We focus on attitudes towards wind power because it has had the most dynamic development among all renewable energy sources in Poland. To elicit values on avoiding renewable energy externalities, we use a choice experiment (CE) approach. To conduct our analysis we applied a theoretically robust econometric approach, the hybrid mixed logit model. From our analysis of data from a large sample of the Polish population, we find that beliefs about wind turbine have distinct negative effects on respondents’ preferences concerning renewable energy development. Respondents who generally have an opinion about potential wind turbine effects would like to have input on renewable energy development in their neighbourhood. Latent beliefs that wind power is not harmful enhance respondents’ preferences for implementing a wind energy project and enhance preferences against solar power development. These beliefs appears to be significantly correlated with respondents’ marginal utility of money.
    Keywords: beliefs about negative effects, choice experiment, preference heterogeneity, renewable energy externalities, stated preferences
    JEL: D12 H41 Q48 Q51
    Date: 2018
  3. By: Alvarez, Sergio; Soto, Jose; Escobedo, Francisco; Lai, John; Adams, Damian
    Abstract: The increasing pace of urbanization worldwide makes urban forests key providers of a wide range of ecosystem services that contribute to human well-being in multiple ways. The United Nations estimates that 54 percent of the world’s population already lives in urban areas, and by 2050 two-thirds of the globe’s people will be living in cities. Forests in the urban and peri-urban landscape provide many services that directly and indirectly benefit human beings, such as carbon sequestration, air quality improvements through particulate deposition, wildlife habitat, and aesthetic benefits that improve land and home values as well as human health outcomes, among many others. The importance and contribution of urban forests to human well-being will only increase as societies worldwide become more urbanized. In this study, we use data from a discrete choice experiment implemented through an online survey of 724 Florida residents, to estimate a series of latent class models of preferences for urban forest attributes. Our results reveal multiple preference groups, each with different willingness-to-pay values for the four forest attributes evaluated: type of trees (native vs. exotic), number of trees (many vs. few), size of trees (fully grown vs. mix of ages), and maintenance costs. Thus, our study estimates the public’s willingness-to-pay for different attributes of urban forests and provides further evidence of the ubiquity of heterogenous preferences for non-market goods and services.
    Keywords: Environmental Economics and Policy
    Date: 2018–01–17
  4. By: Zhang, Xumin; Khachatryan, Hayk
    Abstract: To mitigate potential impacts from the increasing maintained residential landscapes to the environment, state and local governments and water management organizations are interested in policies that promote resource-efficient landscaping practices by individual homeowners. Incentives including rebates, tax returns, and low rate financing, are common monetary instruments used to promote the adoption of eco-friendly equipment or practices (e.g., water-saving appliances). However, the effects of monetary incentives on homeowners’ preferences for alternative landscapes are less understood. Using discrete choice experimentation, this study investigated homeowners’ preferences for rebate incentive programs and willingness to pay (WTP) for alternative landscape attributes. The results reveal that homeowners are willing to pay a premium for rebate programs, and that the environmental benefit information improves homeowners’ preference and WTP for alternative landscape attributes. Also, we clustered homeowners into low, medium, and high rebate preference groups, which allowed investigating the difference in WTP estimates for alternative landscape attributes. Results estimated by mixed logit in WTP space model revealed that homeowners in high rebate preference group assign higher weights to economic attributes, such as rebate and maintenance, while homeowners in the low rebate preference group give more importance to environmental friendly attributes such as smart irrigation or pollinator friendly habitat. The results offer implications for policy makers as they develop water conservation programs.
    Keywords: Environmental Economics and Policy, Institutional and Behavioral Economics
    Date: 2018–02–05
  5. By: Shonkwiler, J. Scott; Ying, Jiahui
    Keywords: Environmental Economics and Policy, Land Economics/Use, Research Methods/Statistical Methods
    Date: 2017–06–30
  6. By: Weng, Weizhe; Morrison, Mark; Boyle, Kevin J.; Boxall, Peter C.
    Keywords: Environmental Economics and Policy, Land Economics/Use, Resource/Energy Economics and Policy
    Date: 2017–06–15
  7. By: Nathaniel Beck
    Abstract: This article deals with asimple issue: if we have grouped data with a binary dependent variable and want to include fixed effects (group specific intercepts) in the specification, is Ordinary Least Squares (OLS) in any way superior to a (conditional) logit form? In particular, what are the consequences of using OLS instead of a fixed effects logit model with respect to the latter dropping all units which show no variability in the dependent variable while the former allows for estimation using all units. First, we show that the discussion of fthe incidental parameters problem is based on an assumption about the kinds of data being studied; for what appears to be the common use of fixed effect models in political science the incidental parameters issue is illusory. Turning to linear models, we see that OLS yields a linear combination of the estimates for the units with and without variation in the dependent variable, and so the coefficient estimates must be carefully interpreted. The article then compares two methods of estimating logit models with fixed effects, and shows that the Chamberlain conditional logit is as good as or better than a logit analysis which simply includes group specific intercepts (even though the conditional logit technique was designed to deal with the incidental parameters problem!). Related to this, the article discusses the estimation of marginal effects using both OLS and logit. While it appears that a form of logit with fixed effects can be used to estimate marginal effects, this method can be improved by starting with conditional logit and then using the those parameter estimates to constrain the logit with fixed effects model. This method produces estimates of sample average marginal effects that are at least as good as OLS, and much better when group size is small or the number of groups is large. .
    Date: 2018–09
  8. By: Van Sandt, Anders T.; Costanigro, Marco; Thilmany McFadden, Dawn D.
    Keywords: Community/Rural/Urban Development, Agribusiness, Environmental Economics and Policy
    Date: 2017–06–15
  9. By: Chen, Yu; Zhen, Chen
    Keywords: Demand and Price Analysis, Food Consumption/Nutrition/Food Safety
    Date: 2018–02–02

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