nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2019‒03‒04
ten papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Income Effects and Rationalizability in Multinomial Choice Models By Debopam Bhattacharya
  2. Regional differences in willingness to pay for organic vegetables in Vietnam By Thanh Mai Ha; Shamim Shakur; Kim Hang Pham Do
  3. Labor Market Frictions and Moving Costs of the Employed and Unemployed By Ransom, Tyler
  4. Nonparametric Counterfactuals in Random Utility Models By Yuichi Kitamura; J\"org Stoye
  5. Paying for Kidneys? A Randomized Survey and Choice Experiment By Julio J. Elias; Nicola Lacetera; Mario Macis
  6. The Empirical Content of Binary Choice Models By Debopam Bhattacharya
  7. Market adoption and diffusion of fecal sludge-based fertilizer in developing countries: crosscountry analyses By Otoo, Miriam; Gebrezgabher, Solomie; Danso, G.; Amewu, Sena; Amirova, Iroda
  8. Consumers' Willigness to Pay for Potting Mix with Biochar By Thomas, McKenzie; Jensen, Kimberly; Clark, Christoper; Lambert, Dayton; English, Burton; Walker, Forbes
  9. Have Econometric Analyses of Happiness Data Been Futile? A Simple Truth about Happiness Scales By Chen, Le-Yu; Oparina, Ekaterina; Powdthavee, Nattavudh; Srisuma, Sorawoot
  10. Structural design of a hierarchical urban transit network integrating modal choice and environmental impacts By Fabien Leurent; Sheng Li; Hugo Badia

  1. By: Debopam Bhattacharya
    Abstract: In multinomial choice settings, Daly-Zachary (1978) and Armstrong-Vickers (2015) provided closed-form conditions, under which choice probability functions can be rationalized via random utility models. A key condition is Slutsky symmetry. We first show that in the multinomial context, Daly-Zachary's Slutsky symmetry is equivalent to absence of income-effects. Next, for general multinomial choice that allows for income-effects, we provide global shape restrictions on choice probability functions, which are shown to be sufficient for rationalizability. Finally, we outline nonparametric identification of preference distributions using these results. The theory of linear partial differential equations plays a key role in our analysis.
    Date: 2019–02
  2. By: Thanh Mai Ha (School of Economics and Finance, Massey University, Palmerston North, New Zealand and Faculty of Economics and Rural Development, Vietnam National University of Agriculture, Vietnam); Shamim Shakur (School of Economics and Finance, Massey University, Palmerston North, New Zealand); Kim Hang Pham Do (School of Economics and Finance, Massey University, Palmerston North, New Zealand)
    Abstract: The concern about vegetable safety, together with a booming population and the rise of the middle class has made Vietnam become a potential market for organic vegetables. This paper investigates the determinants of willingness to pay (WTP) for organic vegetables in Hanoi, Vietnam with a particular attention to regional differences and the effect of risk perception. Using Contingent Valuation Method to analyze the data from a sample of 498 consumers in Hanoi, the paper shows that the perceived use values of organic vegetables, trust in organic labels, and disposable family income increased WTP for organic vegetables in both urban and rural regions. Though risk perception of conventional vegetables was high in both regions, such heightened risk perception just translated into the WTP in the rural region. In addition, the percentage of home-grown vegetables in the total vegetable consumption of the family influenced the WTP in the rural region only. Moreover, being an organic purchaser was positively related to the WTP in the urban region but not in the rural region. The paper also discusses three policy implications for Vietnam to boost the demand for organic food.
    Keywords: Willingness to pay, organic vegetables, food safety, rural-urban difference, Hanoi
    JEL: Q18 D12 I12 Q13 R22
    Date: 2018
  3. By: Ransom, Tyler (University of Oklahoma)
    Abstract: This paper examines the role of labor market frictions and moving costs in explaining the migration behavior of US workers by employment status. Using data on low-skilled workers from the Survey of Income and Program Participation (SIPP), I estimate a dynamic model of individual labor supply and migration decisions. The model incorporates a reduced-form search model and allows for migration for non-market reasons. My estimates show that moving costs are substantial and that labor market frictions primarily inhibit migration of the employed. I use the model to study migration responses to local labor market shocks and to a moving subsidy. Workers' preferences for non-market amenities, coupled with substantial moving costs and employment frictions, grant market power to incumbent employers. Large moving costs also likely affect employers' recruiting behavior.
    Keywords: migration, job search, dynamic discrete choice
    JEL: C35 E32 J22 J61 J64 R23
    Date: 2019–02
  4. By: Yuichi Kitamura; J\"org Stoye
    Abstract: We bound features of counterfactual choices in the nonparametric random utility model of demand, i.e. if observable choices are repeated cross-sections and one allows for unrestricted, unobserved heterogeneity. In this setting, tight bounds are developed on counterfactual discrete choice probabilities and on the expectation and c.d.f. of (functionals of) counterfactual stochastic demand.
    Date: 2019–02
  5. By: Julio J. Elias; Nicola Lacetera; Mario Macis
    Abstract: Legislation and public policies are often the result of competition and compromise between different views and interests. In several cases, strongly held moral beliefs voiced by societal groups lead lawmakers to prohibit certain transactions or to prevent them from occurring through markets. However, there is limited evidence about the specific nature of the general population’s opposition to using prices in such contentious transactions. We conducted a randomized survey with 2,666 American residents to study preferences for legalizing payments to kidney donors. We found strong polarization, with many participants supporting or opposing payments regardless of potential transplant gains. However, about 18 percent of respondents would switch to favoring payments for sufficiently large increases in transplants. Preferences for compensation have strong moral foundations; participants especially reject direct payments by patients, which they find would violate principles of fairness. We corroborate the interpretation of our findings with a choice experiment of a costly decision to donate money to a foundation that supports donor compensation.
    JEL: D01 D63 D64 I11
    Date: 2019–02
  6. By: Debopam Bhattacharya
    Abstract: Empirical demand models used for counterfactual predictions and welfare analysis must be rationalizable, i.e. theoretically consistent with utility maximization by heterogeneous consumers. We show that for binary choice under general unobserved heterogeneity, rationalizability is equivalent to a pair of Slutsky-like shape-restrictions on choice-probability functions. The forms of these restrictions differ from Slutsky-inequalities for continuous goods. Unlike McFadden-Richter's stochastic revealed preference, our shape-restrictions (a) are global, i.e. their forms do not depend on which and how many budget-sets are observed, (b) are closed-form, hence easy to impose on parametric/semi/non-parametric models in practical applications, and (c) provide computationally simple, theory-consistent bounds on demand and welfare predictions on counterfactual budget-sets.
    Date: 2019–02
  7. By: Otoo, Miriam; Gebrezgabher, Solomie; Danso, G.; Amewu, Sena; Amirova, Iroda
    Abstract: The safe recovery of nutrients from our waste streams allows us to address the challenges of waste management and soil nutrient depletion conjointly. Commercialization of waste-based organic fertilizers such as FortiferTM (fecal sludge-based co-compost) has the potential to generate significant benefits for developing economies via cost recovery for the sanitation sector and the provision of an alternative agricultural input for smallholder farmers. To guide future FortiferTM businesses, this report presents examples of detailed market assessments, based on farmers’ perceptions, attitudes and willingness-to-pay (WTP) for a pelletized and non-pelletized FortiferTM co-compost. The research was conducted in the Greater Accra and Western regions in Ghana, and in and around Kampala (Uganda), Bangalore (India), Hanoi (Vietnam), and Kurunegala (Sri Lanka). Cross-country analyses helped to understand the effects of market drivers and, where possible, capture lessons learned for knowledge sharing.
    Keywords: Agribusiness, Agricultural Finance, Crop Production/Industries, Farm Management, Financial Economics, Food Consumption/Nutrition/Food Safety, Marketing
    Date: 2018–02–19
  8. By: Thomas, McKenzie; Jensen, Kimberly; Clark, Christoper; Lambert, Dayton; English, Burton; Walker, Forbes
    Keywords: Demand and Price Analysis, Marketing
    Date: 2019–02
  9. By: Chen, Le-Yu (Academia Sinica); Oparina, Ekaterina (University of Surrey); Powdthavee, Nattavudh (University of Warwick); Srisuma, Sorawoot (University of Surrey)
    Abstract: Econometric analyses in the happiness literature typically use subjective well-being (SWB) data to compare the mean of observed or latent happiness across samples. Recent critiques show that com-paring the mean of ordinal data is only valid under strong assumptions that are usually rejected by SWB data. This leads to an open question whether much of the empirical studies in the economics of happiness literature have been futile. In order to salvage some of the prior results and avoid future issues, we suggest regression analysis of SWB (and other ordinal data) should focus on the median ra-ther than the mean. Median comparisons using parametric models such as the ordered probit and logit can be readily carried out using familiar statistical softwares like STATA. We also show a previously as-sumed impractical task of estimating a semiparametric median ordered-response model is also possi-ble by using a novel constrained mixed integer optimization technique. We use GSS data to show the famous Easterlin Paradox from the happiness literature holds for the US independent of any paramet-ric assumption.
    Keywords: ordered-response model, mixed-integer optimization, median regression, subjective well-being
    JEL: C24 C61 I31
    Date: 2019–02
  10. By: Fabien Leurent (LVMT - Laboratoire Ville, Mobilité, Transport - IFSTTAR - Institut Français des Sciences et Technologies des Transports, de l'Aménagement et des Réseaux - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École des Ponts ParisTech); Sheng Li (LVMT - Laboratoire Ville, Mobilité, Transport - IFSTTAR - Institut Français des Sciences et Technologies des Transports, de l'Aménagement et des Réseaux - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École des Ponts ParisTech); Hugo Badia (KTH - Royal Institute of Technology [Stockholm])
    Abstract: The paper develops a structural model and a design methodology for transit system planning in an urban area. Transit "components" are modelled by subarea and by sub-mode in terms of line length, station spacing, and fleet size, in order to determine both quality of service and production costs. Roadway networks are modeled with a Macroscopic Fundamental Diagram that relates speed to network capacity and vehicle demand. Local and global environmental impacts are considered. Travel demand includes both mode-dependent users and mode-choosers able to adopt the mode that offers higher utility. The design methodology involves a mathematical program of welfare optimization with respect to transit factors and fares. Two definitions of welfare are given, one that takes into account only demand surplus and supply profit, the other including environmental impacts. An example of application to Greater Paris shows that there is room for system optimization under current subsidy conditions, and that the explicit inclusion of environmental impacts brings about a significant shift in the "optimal" policy package.
    Keywords: multimodal transportation,transit network,design model,social welfare,environmental impacts
    Date: 2018–09–17

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