nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2019‒02‒25
five papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. What Aspects of Formality Do Workers Value? Evidence from a Choice Experiment in Bangladesh By Mahmud, Minhaj; Gutierrez, Italo A.; Kumar, Krishna B.; Nataraj, Shanthi
  2. Measuring Long-Run Price Elasticities in Urban Travel Demand By Donna, Javier D.
  3. Respuesta del consumidor a la información sobre la huella de carbono de los alimentos: un análisis usando un experimento de elección discreta By Sara Pérez Gutiérrez; Andrés Vargas Pérez
  4. Partial effects estimation for fixed-effects logit panel data models By Bartolucci, Francesco; Pigini, Claudia
  5. Discrete Choice under Risk with Limited Consideration By Levon Barseghyan; Francesca Molinari; Matthew Thirkettle

  1. By: Mahmud, Minhaj (Bangladesh Institute of Development Studies (BIDS)); Gutierrez, Italo A. (RAND); Kumar, Krishna B. (RAND); Nataraj, Shanthi (RAND)
    Abstract: Using a choice experiment among 2,000 workers in Bangladesh, we to elicit willingness to pay (WTP) for specific job benefits typically associated with formal employment. We find that workers value job stability the most; the average worker would be willing to forego a 27 percent increase in monthly income in order to obtain a 1-year written contract (relative to no contract), or to forego a 12 percent increase to obtain thirty days of termination notice. On average, government workers place a higher value on contracts than do private sector employees, while casual workers particularly value higher pay. Our use of choice experiments to overcome the challenges associated with estimating WTP for specific job benefits from hedonic wage regressions or from observed job transitions is of interest in its own right, especially in a developing country context where data on worker transitions are unavailable and many workers are informally employed.
    Keywords: informality, worker benefits, discrete choice experiments
    JEL: J32 J81
    Date: 2019–01
  2. By: Donna, Javier D.
    Abstract: This paper develops a structural model of urban travel to estimate long-run price elasticities. A dynamic discrete choice demand model with switching costs is estimated, using a panel dataset with public market-level data on automobile and public transit use for Chicago. The estimated model shows that long-run own- (automobile) and cross- (transit) price elasticities are more elastic than short-run elasticities, and that elasticity estimates from static and myopic models are downward biased. The estimated model is used to evaluate the response to a gasoline tax. Static and myopic models mismeasure long-run substitution patterns, and could lead to incorrect policy decisions.
    Keywords: Long-run price elasticities, Dynamic demand travel, Hysteresis
    JEL: L71 L91 L98
    Date: 2018–11–05
  3. By: Sara Pérez Gutiérrez; Andrés Vargas Pérez
    Abstract: Resumen El alto impacto ambiental de la demanda por proteína animal para la alimentación humana hace imperativo que los individuos modifiquen sus patrones de consumo hacia dietas más sostenibles. El uso de etiquetas ambientales en los alimentos puede ser una alternativa para lograr dicho objetivo. A través de un experimento de elección este estudio encuentra que el atributo huella de carbono es relevante a la hora de elegir un plato de almuerzo. Se discute cómo podrían informar estos resultados el diseño de estrategias para inducir decisiones de compra más sostenibles. Palabras clave: etiquetado de los alimentos, provisión de información ambiental, experimento de elección. Clasificación JEL: C93, D12, Q18. Abstract Rising animal-based foods consumption is having major negative effects on the environment. Shifting diets can thus contribute to a sustainable food system. Food labeling is one among several instruments to encourage more sustainable eating. Using a discrete choice experiment, this study founds that giving information about the the carbon foodprint of food have the potential to affect consumers’ choices, making more likely the consumption of a meal with a greater content of plant-based protein. We discuss how this findings could inform policy making. Keyword: food labeling, carboon foodprint, shifting diets, discrete choice experiment. JEL Codes: C93, D12, Q18.
    Date: 2018–12–28
  4. By: Bartolucci, Francesco; Pigini, Claudia
    Abstract: We propose a multiple step procedure to estimate Average Partial Effects (APE) in fixed-effects panel logit models. Because the incidental parameters problem plagues the APEs via both the inconsistent estimates of the slope and individual parameters, we reduce the bias by evaluating the APEs at a fixed-T consistent estimator for the slope coefficients and at a bias corrected estimator for the unobserved heterogeneity. The proposed estimator has bias of order O(T −2 ) as n → ∞ and performs well in finite sample, even when n is much larger than T . We provide a real data application based on the labor supply of married women.
    Keywords: Average partial effects, Bias reduction, Binary panel data, Conditional Maximum Likelihood
    JEL: C12 C23 C25
    Date: 2019–02–18
  5. By: Levon Barseghyan; Francesca Molinari; Matthew Thirkettle
    Abstract: This paper is concerned with learning decision makers' (DMs) preferences using data on observed choices from a finite set of risky alternatives with monetary outcomes. We propose a discrete choice model with unobserved heterogeneity in consideration sets (the collection of alternatives considered by DMs) and unobserved heterogeneity in standard risk aversion. In this framework, stochastic choice is driven both by different rankings of alternatives induced by unobserved heterogeneity in risk preferences and by different sets of alternatives considered. We obtain sufficient conditions for semi-nonparametric point identification of both the distribution of unobserved heterogeneity in preferences and the distribution of consideration sets. Our method yields an estimator that is easy to compute and that can be used in markets with a large number of alternatives. We apply our method to a dataset on property insurance purchases. We find that although households are on average strongly risk averse, they consider lower coverages more frequently than higher coverages. Finally, we estimate the monetary losses associated with limited consideration in our application.
    Date: 2019–02

This nep-dcm issue is ©2019 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.