nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2018‒12‒03
nine papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Assessing consumer and producer preferences for animal welfare using a common elicitation format. By Schreiner, J.A.
  2. Credit-Constraints and Preferences for Crop Insurance in Ghana: Implications of Attribute Non-Attendance in Discrete Choice Experiments By Owusu, V.
  3. Consumer Willingness to Pay for Fair Trade Attributes of Goat Meat in Kenya By Otieno, D.
  4. The effects of climate change on crop and livestock choices By Basurto-Hernandez, S.; Maddison, D.; Banerjee, A.
  5. Assessing household preferences for wastewater fed fish: Lessons from a field experiment in Peru By Danso, G.; Boaitey, A.; Otoo, M.
  6. Which type of policy instrument do citizens and experts prefer? A choice experiment on Swedish marine and water policy By Ek, Claes; Elofsson, Katarina; Lagerkvist, Carl-Johan
  7. How much load flexibility can a euro buy? Findings from a choice experiment with companies in the German commerce and services sector By Olsthoorn, Mark; Schleich, Joachim; Wohlfarth, Katharina; Klobasa, Marian
  8. Farmers Willingness to Share Data: A Study of Saskatchewan Farmers By Turland, M.; Slade, P.
  9. Can Stated Measures of Willingness-to-Accept be Valid? Evidence from Laboratory Experiments By Lloyd-Smith, P.; Adamowicz, V.

  1. By: Schreiner, J.A.
    Abstract: This study assesses pig farmers willingness-to-accept (WTA) higher farm animal welfare (FAW) standards and consumers willingness-to-pay (WTP) for thus enhanced standards. The analysis is based on Discrete Choice Experiments with nearly identical choice sets for both farmers (N=140) and consumers (N=775). Based on preference estimates from a random parameter logit (RPL) model, supply and demand curves for high-welfare pork in Germany are estimated and market equilibria are derived for alternative levels of FAW. We find that estimates of WTP are significantly positive for all FAW attributes. By contrast, our model revealed significant WTA estimates only for surface area per pig and the amount of bedding material on offer, but not for the other FAW attributes. Market simulations for high-welfare pork indicate increasing divergence between demand and supply with rising FAW standards. We estimate a market share of 49% for pork produced in compliance with an entry-level FAW programme with standards only slightly above the legal minimum. Programmes with more demanding standards are estimated to gain much smaller market shares. Keywords Farm animal welfare, Discrete Choice Experiment, Random Parameter Logit, market simulation, common elicitation format. Acknowledgement :
    Keywords: Livestock Production/Industries
    Date: 2018–07
  2. By: Owusu, V.
    Abstract: , preferences for crop insurance programs are closely linked to credit market imperfections. Understanding the credit constraints of small holder farmers and their attribute non-attendance in the preferences for crop insurance products provide better assessments of policy-relevant instruments needed to ensure participation in crop insurance policies and reduction of agricultural production risks in sub-Saharan Africa. We analyze farmers preferences for different non-indexed crop insurance alternatives using Discrete Choice Experiment (DCE) data on cocoa farmers from southern Ghana, whilst recognizing the endogeneity of attribute non-attendance (ANA) of the respondents in the choice tasks, and the impact of liquidity constraints on farmers choice for the crop insurance products in the ANA framework. The results indicate that credit-constrained farmers attend more to premium and payment mode attributes of the crop insurance products, and that credit-constrained farmers tend to exhibit lower willingness to pay (WTP) estimates for the crop insurance attributes. We provide fruitful policy recommendations in the paper. Acknowledgement : The author thanks the Alexander von Humboldt Foundation for financial support for the study.
    Keywords: Risk and Uncertainty
    Date: 2018–07
  3. By: Otieno, D.
    Abstract: Fair trade is an important ethical concern in food value chains. However, there is a dearth of empirical insights on consumer preferences for this critical aspect especially in the domestic markets of developing countries. The current study analyzed consumer willingness to pay (WTP) for fair trade attributes in goat meat value chain in the capital city of Kenya, Nairobi. Choice experiment data from 270 consumers was analyzed using the random parameter logit (RPL) model. The results showed that 56% of the consumers were aware of the fair trade concept and 64% of them were willing to pay for fair trade compliant practices in goat meat value chains. Specifically, consumers were willing to pay a premium of 62% to prevent child labour, 45% to support provision of medical insurance for workers in the meat value chain, 40% for direct purchase from producers, 39% for fair trade labelling and 30% to support the disabled people as part of corporate social responsibility. These findings should be integrated in the goat meat value chain in order to make the enterprises more responsive to the ethical concerns of various stakeholders. Key words: fair trade, consumer willingness-to-pay, goat meat, Kenya. Acknowledgement : The author appreciates useful insights from colleagues at the University of Nairobi.
    Keywords: Consumer/Household Economics
    Date: 2018–07
  4. By: Basurto-Hernandez, S.; Maddison, D.; Banerjee, A.
    Abstract: This paper investigates the effect of climate change on crop and livestock choices using two discrete choice models: Multinomial Logit (MNL) and Nested Logit (NL) models. Taking advantage of a new-plot level dataset for Mexico we identify the effect of climate on agriculturalists observed choices. Using Geographical Information Systems (GIS) we combine data on 31 types of crops and livestock encountered in 219,985 and 168,265 plots corresponding to the 2012 and 2014 agricultural years with climate data. Also included in the analysis are the expected output and input prices, soil types, indicators of access to markets and information, socio-demographic characteristics of the farmer, and subsidy payments. We find strong evidence about the inappropriateness of the Independence of Irrelevant Alternatives (IIA) assumption underpinning the MNL model. This finding leads to remarkable differences in the predictions from the MNL and NL models. Speculations about the effect of climate change on farmers choices suggest that in the event of a warmer and drier future, Mexican agriculturalists will move their production efforts from alfalfa, cacao, beef cattle, grapes, onions, oranges, red tomato, soy, and sugar cane to bananas, barley, lemon, squash and potatoes. Acknowledgement :
    Keywords: Environmental Economics and Policy
    Date: 2018–07
  5. By: Danso, G.; Boaitey, A.; Otoo, M.
    Abstract: Abstract This paper used choice experiment to assess households preferences for wastewater fed fish in Lima, Peru. The study considered four fish attributes, price, source, certification and information on additives. In total, 443 households participated in the field experiment. Results from the estimation of the random parameter logit (RPL) model in both the willingness to pay (WTP) and preference space showed that in general, households expressed positive preferences for fish raised in wastewater, freshwater and wild fish as well as certification and use of additives. Our findings show that household WTP for fish raised in the wild and in freshwater were positive and more robust as compared to WTP for wastewater fed fish which was influenced by factors such as certification. We find that households are willing to pay premiums of $0.69, $1.06 and $2.98 for wastewater, freshwater and wild fish respectively. We also find evidence to suggest that health and food safety concerns are the most important consideration in household preferences for wastewater fed fish amongst a set of perceptions variables examined in this study. Acknowledgement :
    Keywords: Research Methods/ Statistical Methods
    Date: 2018–07
  6. By: Ek, Claes (Department of Economics, School of Business, Economics and Law, Göteborg University); Elofsson, Katarina; Lagerkvist, Carl-Johan
    Abstract: In the choice between alternative environmental policy instruments, economists tend to favor policies capable of attaining cost-efficiency, but other considerations may be important to stakeholders. We perform a choice experiment modeled on Swedish water and marine policy to estimate preferences for different types of environmental policy instruments among citizens and municipal experts. To approximate preferences for each instrument per se, choice sets include several attributes that respondents may otherwise view as correlated with instrument type, such as how costs are shared between taxpayers and farmers. In our mixed-logit regressions, both the modal citizen and the modal expert prefer direct regulation and subsidies to nutrient trading. Experts weight taxpayer costs less heavily, implying larger WTP estimates; in particular, nutrient trading is unlikely to deliver sufficiently large cost savings for experts to prefer it to other instrument types. This potentially explains the low takeup of water quality trading outside the US.
    Keywords: choice experiments; instrument choice; nutrient trading; water policy
    JEL: H23 Q53 Q58
    Date: 2018–11
  7. By: Olsthoorn, Mark; Schleich, Joachim; Wohlfarth, Katharina; Klobasa, Marian
    Abstract: Demand-side load management is considered a cost-efficient solution for ac-commodating growing shares of intermittent renewable electricity production. Here, we use double-bounded dichotomous choice (DBDC) contingent valua-tion (CV) to estimate the effectiveness of a subsidy for companies to make available their HVAC and cooling systems for automated load management. Our sample includes 1131 companies in the German commerce and services sector with Ï10 employees of which we elicit the willingness to accept (WTA) automated load management in exchange for an annual subsidy payment. To our knowledge, our study is the first CV study on load management among companies.
    Keywords: load management,demand response,subsidies,contingent valuation
    Date: 2018
  8. By: Turland, M.; Slade, P.
    Abstract: Modern farm machinery captures geocoded data on all aspects of a farming operation. These detailed datasets are called big data. Although some of this data is useful to individual farmers, much of it has little value to the farmer that collects it. Capturing the true value of big data comes when it is aggregated over many farms, allowing researchers to find underlying trends. To analyze farmers willingness to share data we conduct a hypothetical choice experiment that asked farmers in Saskatchewan whether they would join a big data program. The choice tasks varied the type of organization that operated the big data program, and included financial and non-financial incentives. Heteroscedastic and random effects probit models are presented using data from a survey constructed for this study. The results are consistent across models and find that farmers are most willing to share their data with university researchers, followed by crop input suppliers or grower associations, and financial institutions or equipment manufacturers. Farmers are least willing to share their data with government. Farmers are more willing to share data in the presence of a financial incentive or non-financial incentive such as comparative benchmark statistics or prescription maps generated from the data submitted. Acknowledgement :
    Keywords: Research and Development/ Tech Change/Emerging Technologies
    Date: 2018–07
  9. By: Lloyd-Smith, P.; Adamowicz, V.
    Abstract: Willingness-to-accept (WTA) questions have been largely abandoned in stated preference empirical work in favor of eliciting willingness-to-pay (WTP) responses, mainly due to perceived unreliability of questions that ask respondents for compensation amounts. This paper reassesses whether stated WTA welfare measures can be valid in public and private good contexts. We conduct two sets of laboratory experiments to analyze whether elicitation format, survey design and framing, and follow-up questions can generate truthful responses. For public goods, we adapt the existing WTP incentive compatibility theoretical framework to the WTA context and test the theory using an experiment involving voting. Results are consistent with the WTP literature and suggest that WTA values can be valid as long as responses have consequences for respondents. For the private good experiment, we focus on whether respondents are motivated to affect the price or the provision of the good. We find that strategic behavior is present and in the direction expected by theory. Survey framing and the use of follow-up questions can provide bounds on the value estimates. These findings raise potential concerns with the use of non-incentive compatible elicitation mechanisms in WTA contexts. Acknowledgement :
    Keywords: Research Methods/ Statistical Methods
    Date: 2018–07

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