nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2018‒11‒19
eight papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Integrating soil and climate-related aspects into the valuation of willingness to pay for public goods provided by agriculture in an intensive agricultural production region: The case of the Marchfeld By Niedermayr, A.; Schaller, L.; Kieninger, P.; Kantelhardt, J.
  2. Are public preferences for pasture landscapes heterogeneous? Results of a discrete choice experiment in Germany By Schaak, H.; Musshoff, O.
  3. Heterogeneous Demand for Quality Soybean in Northern Ghana By Martey, E.
  4. Linear IV Regression Estimators for Structural Dynamic Discrete Choice Models By Kalouptsidi, Myrto; Scott, Paul T.; Souza-Rodrigues, Eduardo
  5. Estimation of Households’ and Businesses’ Willingness to Pay for Improved Reliability of Electricity Supply in Nepal By Naghmeh Niroomand; Glenn P. Jenkins
  6. Agribusiness opportunities for youth in Nigeria: Farmers perceptions and willingness to pay for mechanized harvesting equipment By Agossadou, A.J.; Fiamohe, R.; Tossou, H.; Kinkpe, T.
  7. Nonparametric maximum likelihood methods for binary response models with random coefficients By Jiaying Gu; Roger Koenker
  8. Willingness to internalize sustainability in agricultural value chains through vertical coordination in Vietnam By Ba, H.A.; Demont, M.; Veettil, P.C.

  1. By: Niedermayr, A.; Schaller, L.; Kieninger, P.; Kantelhardt, J.
    Abstract: In the context of an upcoming CAP-reform which will most likely condition payments to farmers stronger on a measurable provision of public goods, the aim of this study is to elicit the willingness to pay (WTP) for public goods (PGs) provided by agriculture in the Marchfeld, a dynamically developing and semi-urban region in Austria. Situated between Vienna and Bratislava it is marked by an intensive agricultural production and at the same time rising environmental awareness of the local population. We carry out a discrete choice experiment for the 3 public goods ground water quality, landscape diversity and climate stability, which were pre-selected via focus groups. Due to high preference heterogeneity we estimate a random parameters logit model and include interactions with socio-demographic factors in order to further disentangle differences in preferences. We find a positive and significant WTP for all three public goods, with groundwater quality being most important for the participants, followed by landscape diversity and climate stability. The results of this study in combination with a supply-side assessment, consisting of different management options for farmers, could form the basis for the development of governance mechanisms for the smart provision of public goods by agriculture in the Marchfeld region. Acknowledgement :
    Keywords: Environmental Economics and Policy
    Date: 2018–07
  2. By: Schaak, H.; Musshoff, O.
    Abstract: The development of the extent and the usage of pasture land has become a topic of increasing interest from several perspectives. In comparison to the pasture extent, where political actions seek to protect and preserve pasture land, the usage form faces a broader public discussion. Here, many stakeholders express a preference of the usage of pastures by using grazing techniques. Despite the relevance, grazing livestock is rarely considered in research on public landscape preferences. By using the methods of discrete choice experiments (DCE), this study deepens the understanding of the German public preferences for pasture land. Based on a representative sample, the main results indicate that there is a general preference and WTP for livestock presence in the landscape in Germany. The mean WTP does not depend on the livestock density. Still it is found that scale heterogeneity is present in the sample. The paper discusses the relevant implications which follow from this result. Further, the paper discusses the possible differences in the study outcomes when using different econometric models. Here, the results indicate that future DCE applications on landscape preferences should consider econometrics models which account for scale heterogeneity. This could improve the understanding of the preference structures. Acknowledgement : The study was supported by the Ministry for Science and Culture of Lower Saxony (MWK) within the collaborative research project SAM, Analysis of Dairy Production: Grazing versus Indoor Housing of Dairy Cows, Support Code: ZN 2864
    Keywords: Livestock Production/Industries
    Date: 2018–07
  3. By: Martey, E.
    Abstract: Agricultural commercialization is considered a critical pathway for economic development in Sub Saharan Africa. However, lack of market information and poor infrastructure may impede this development. We employ discrete choice models to investigate traders preferences for high quality soybean traits and explore heterogeneity across traders using primary data from northern Ghana. Random parameter logit (RPL) and latent class logit (LCL) models were both fit to the data and used to estimate marginal willingness to pay (MWTP) for soybean trade attributes. Results suggest that traders significantly discount the price of soybean attributes such as light brown, small size, varieties other than Jenguma" and soybean mixed with foreign materials like stones, straw and husk. However, traders were willing to pay a higher price for a bag of soybean that meets all the preferred trade attributes. We also find significant heterogeneity among traders explained partly by socioeconomic and trade characteristics of the respondents. Three distinct classes were identified per the LCL results with unique preferences, suggesting both skepticism and high price discounting. To ensure consistent information on quality and price of soybean among supply chain actors, there is the need for establishment of multi-stakeholder platform for consensus building on quality standards. Acknowledgement : This material is based upon work supported by the United States Agency for International Development, as part of the Feed the Future initiative, under the CGIAR Fund, award number BFS?G?11?00002, and the predecessor fund the Food Security and Crisis Mitigation II grant, award number EEM?G?00?04?00013. The data was partly funded by the Office of International Program (OIP), UIUC; Soybean Innovation Lab (SIL) and the Savanna Agricultural Research Institute of the Council for Scientific and Industrial Research (CSIR-SARI).
    Keywords: Demand and Price Analysis
    Date: 2018–07
  4. By: Kalouptsidi, Myrto; Scott, Paul T.; Souza-Rodrigues, Eduardo
    Abstract: In structural dynamic discrete choice models, the presence of serially correlated unobserved states and state variables that are measured with error may lead to biased parameter estimates and misleading inference. In this paper, we show that instrumental variables can address these issues, as long as measurement problems involve state variables that evolve exogenously from the perspective of individual agents (i.e., market-level states). We define a class of linear instrumental variables estimators that rely on Euler equations expressed in terms of conditional choice probabilities (ECCP estimators). These estimators do not require observing or modeling the agent's entire information set, nor solving or simulating a dynamic program. As such, they are simple to implement and computationally light. We provide constructive identification arguments to identify the model primitives, and establish the consistency and asymptotic normality of the estimator. A Monte Carlo study demonstrates the good finite-sample performance of the ECCP estimator in the context of a dynamic demand model for durable goods.
    Date: 2018–10
  5. By: Naghmeh Niroomand (Cambridge Resources International.Inc); Glenn P. Jenkins (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University, North Cyprus)
    Abstract: For the decade prior to 2016 Nepal suffered from the worst electricity shortages in South Asia. During this period load shedding occurred for up to 18 hours a day when hydropower generation is low. This research uses parametric and non-parametric models to estimate households’ and businesses’ willingness to pay (WTP) for improved reliability of electricity services in Nepal. A contingent valuation (CV) survey was completed by 1,800 households and 590 businesses. The parametric models are estimated using Logit regressions. The median, Turnbull and the Kriström mean estimation approach were used for the non-parametric estimations. Both households and businesses are willing to pay more to get from a 50% reduction to a complete elimination of outages than they are willing to pay to get from their current situation to a 50% reduction in outages. This difference in the estimates of the WTP for these two options is even more important in the case of businesses than for households. It is estimated that the annual benefit in 2017 from improving the reliability of the electricity service would be approximately US$324 million with a present value over 20 years of between US$2 and 3.8 billion.
    Keywords: : Nepal, willingness to pay, electricity outage, contingent valuation, non-parametric methods estimation Electricity.
    JEL: D61 Q41
    Date: 2018–05
  6. By: Agossadou, A.J.; Fiamohe, R.; Tossou, H.; Kinkpe, T.
    Abstract: Nigeria is facing two major problems. The high rate of post-harvest losses in rice value chain and high rate of youth unemployment. This study assessed farmers perception on business opportunities for youth as well as farmers willingness to upgrade and to pay for two mechanized harvesting equipment, mini-harvester and reaper that youth can use to provide services. The study is conducted in the two rice development hubs in Nigeria on 290 farmers. Contingent valuation method combine with a two stage approach is used to elicit farmers willingness to pay. Descriptive statistics show that farmers perceive harvesting and threshing as the main business opportunities for youth in rice value chain. Moreover, majority of farmers prefer mechanized harvesting equipment to traditional method and are willing to pay for that with a strong preference to reaper. Compared to the cost of traditional method, farmers are willing to pay 27.33% and 21.59% less respectively for mini-harvester and reaper. Double hurdle model reveals that access to credit, extension, training and perceptions increase farmers willingness to upgrade and to pay. The study suggest many policy actions Key words: Youth, Nigeria, Rice value chain, willingness to pay, contingent valuation Acknowledgement : Authors are grateful to CGIAR research program on rice for financing the study. Thanks to partners of State Agricultural and Rural Development Programs of the two rice hubs, executive of innovation platforms and all enumerators and facilitators in Nasarawa and Kano rice hubs.
    Keywords: Agribusiness
    Date: 2018–07
  7. By: Jiaying Gu; Roger Koenker
    Abstract: Single index linear models for binary response with random coefficients have been extensively employed in many econometric settings under various parametric specifications of the distribution of the random coefficients. Nonparametric maximum likelihood estimation (NPMLE) as proposed by Cosslett (1983) and Ichimura and Thompson (1998), in contrast, has received less attention in applied work due primarily to computational difficulties. We propose a new approach to computation of NPMLEs for binary response models that significantly increase their computational tractability thereby facilitating greater flexibility in applications. Our approach, which relies on recent developments involving the geometry of hyperplane arrangements, is contrasted with the recently proposed deconvolution method of Gautier and Kitamura (2013). An application to modal choice for the journey to work in the Washington DC area illustrates the methods.
    Date: 2018–11
  8. By: Ba, H.A.; Demont, M.; Veettil, P.C.
    Abstract: With the growing concern for issues related to climate change, the development of sustainable agricultural value chains is of prime concern. Using a Discrete Choice Experiment, we examine both firms and farmers prospective responses to the internalization of sustainability through contract farming in the Vietnamese rice sector. Our findings suggest that farmers are more willing to internalize environmental sustainable production standards in contract farming than agribusiness firms. The latter are found less likely to mandate GlobalGAP/VietGAP production standards due to the cost of implementation and the lack of institutional support. It may be more interesting for firms to invest in standards with lower entry barrier. Furthermore, the internalization of the socio-economic pillar of sustainability in contract farming may require stimulating demand for sustainable rice and providing an enabling institutional environment for both farmers and firms to grasp new market opportunities. Acknowledgement : This research was conducted as part of the CORIGAP project: Closing Rice Yield Gaps in Asia with Reduced Environmental Footprint. The project was funded by the Swiss Agency for Development and Cooperation (SDC). Additional funding was provided by the CGIAR Research Program on Rice. The authors would like to acknowledge Nguyen Thi Kieu and Nguyen Thi My Phung from the Department of Agriculture and Rural Development (DARD), Can Tho and An Giang, Vietnam for their excellent research support.
    Keywords: Marketing
    Date: 2018–07

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