nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2019‒04‒01
six papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Preference Reversals in Discrete Choice Experiments. Inattention or Preference Uncertainty? Some Evidence Using Eyetracking By Balcombe, Kelvin; Fraser, Iain; Williams, Louis; McSorley, Eugene
  2. Coffee farmers’motivations to comply with sustainability standards By Sylvaine Lemeilleur; Subervie Julie; Anderson Edilson Presoto; Roberta De Castro Souza; Maria Sylvia Macchione Saes
  3. Preferences of Gold Coast residents for the future of the Southport Spit: Evidence from a choice experiment By Graham, Victoria; Fleming, Christopher M; Smart, James CR
  4. Willingness to Pay for a Domestic Food Waste Diversion Policy Option in Regional Queensland, Australia By Benyam, Addis; Rolfe, John; Kinnear, Susan
  5. Willingness to pay for clean air: Evidence from quasi-experiment in Japan By NA
  6. On the role of probability weighting on WTP for crop insurance with and without yield skewness By Douadia Bougherara; Laurent Piet

  1. By: Balcombe, Kelvin; Fraser, Iain; Williams, Louis; McSorley, Eugene
    Abstract: We investigate the relationship between visual attention and attendence with the rate of "preference reversals" in a discrete choice experiment (DCE) that employed eyetracking. We nd that visual attention and attendance, counter to our initial expectations, is positively related to the rate of preference reversal. Our results indicate that moderately low levels of visual attention should not be used as a way of identifying individuals with low levels of engagement, nor should preference reversals necessarily be assumed to indicate low levels of participant engagement. We nd that those reversing preferences do not substantively di¤er from the rest of the population in terms of their underlying preferences. Rather, these respondents spend longer looking at tasks that are similar in terms of utility, so more complex, and as a result these respondents are more uncertain of the choice to make.
    Keywords: Research and Development/Tech Change/Emerging Technologies
    Date: 2019–02
  2. By: Sylvaine Lemeilleur (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - CIHEAM - Centre International des Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Subervie Julie (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Anderson Edilson Presoto (USP - University of São Paulo); Roberta De Castro Souza (USP - University of São Paulo); Maria Sylvia Macchione Saes
    Abstract: The production of certified coffee has increased significantly in recent years. However, most stringent standards are least often chosen by farmers. We ran a choice experiment among 250 Brazilian coffee farmers in the state of Minas Gerais to investigate the barriers that affect participation in certification schemes that require improved agricultural practices. Our results suggest that non-cash payments such as long-term selling contracts or the provision of technical assistance to comply with the environmental requirements are likely to motivate farmers to participate in certification schemes. Farmers' preferences for these non-cash rewards, however, appear highly heterogeneous. Results moreover show that the minimum willingness-to-accept for compost adoption is twice as high as the average price premium for certified coffee in the current context, which may partly explain why most coffee farmers continue to be reluctant to enter the most stringent certification schemes such as the Organic standard.
    Keywords: choice experiment,coffee,certification,erosion,voluntary sustainability standards,pesticides,compost,Brazil
    Date: 2019
  3. By: Graham, Victoria; Fleming, Christopher M; Smart, James CR
    Abstract: The Southport Spit, as a relatively green and open space at the northern end of the Gold Coast beaches, is under continual development pressure and has been subject to a number of contentious development proposals over the past 50 years. In order to better understand the preferences of Gold Coast residents for the future of the site, we employ a survey-based method known as choice experiments. This is a method whereby respondents are asked to choose between alternative outcomes, described in terms of their attributes and the levels these take. Development alternatives were described in terms of four attributes: development focus (cruise ship terminal, casino, neither or both), height of future development (low-, medium- or high-rise), extent of developed space (25%, 50% or 75% of the available footprint) and open space preservation and recreational space charge ($70, $50, $35, $20, $10, $0). We received 345 usable responses to our online survey, with results revealing three distinct segments within the community. Approximately 45% of the sample were labelled ‘pro-conservation’ and are opposed to the idea of both a cruise ship terminal and casino being developed, prefer the maximum three-storey (low-rise) development limits to be retained and oppose the extent of developed space increasing to 75% of the available footprint. Approximately 33% of the sample were labelled ‘pro-development’ and are in favour of all three development options, prefer medium-rise over low- and high-rise options, and have no clear preferences for the extent of developed space. Approximately 22% of the sample were labelled ‘middle ground’ and reveal a slight preference for a cruise ship terminal, prefer low-rise development and an increase in the extent of developed space to 50% of the available footprint. In all, our results suggest there is some level of community support for the development of a cruise ship terminal, but far less support for a casino.
    Keywords: Community/Rural/Urban Development
    Date: 2019–02
  4. By: Benyam, Addis; Rolfe, John; Kinnear, Susan
    Abstract: The cost of disposing domestic food waste (DFW) in open landfills is a significant financial expenditure for most Councils in regional Australia. However, there is little information about the extent that householders value the environmental goods and services that are impacted by DFW disposal. This paper presents non-market valuations for a hypothetical kerbside domestic food waste collection service from a household survey in two local government areas in the Central Queensland region. Choice modelling (CM) and contingent valuation method (CVM) were employed to elicit and estimate willingness to pay (WTP) of the community for a DFW collection service. In the CM exercise, latent class analysis results for the sub-groups supporting an improvement option revealed that the respondents’ utility increased by $4.13 for lifespan expansion of the local landfill. On the contrary, the group had $3.05 and $0.28 utility declines for a fortnightly DFW collection service and an increase in the rate of methane emission from DFW disposal, respectively. For the status quo group, utility increased by $5.05 for a landfill lifespan extension but decreased by $16.26 for potential odour from the collection bins. Under the CVM exercise, a Multilogit estimator model for the overall sample population showed a WTP of $30.42 for the service, with 58% participation rate in the improvement option. This valuation study provides policy insights on the importance of full-cost accounting of environmental goods and services attributes, which is useful information for future implementation of voluntary or mandatory DFW diversion schemes.
    Keywords: Consumer/Household Economics
    Date: 2019–02
  5. By: NA
    Abstract: Over the past decades ambient concentrations of suspended particulate matter (SPM) have dramatically reduced in metropolitan areas in Japan. This paper analyzes a property-level panel dataset for 1992-2015 to measure the extent to which the improved air quality was capitalized into residential land prices. Single-equation estimates show no evidence of the capitalization. To address potential endogeneity biases, I instrument SPM concentrations with municipalities’ designation status under the Automobile NOx/PM Law (ANPL), and find that the elasticity of residential land prices with respect to SPM concentration is -0.57. Using IV approach, I also find that the improvements in SPM concentrations increased inflows of migrations. These results are confirmed with a battery of robustness checks.
    Keywords: Environmental Economics and Policy
    Date: 2019–02
  6. By: Douadia Bougherara (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Laurent Piet (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST)
    Abstract: A growing number of studies in finance and economics seek to explain insurance choices using the assumptions advanced by behavioral economics. One recent example in agricultural economics is the use of cumulative prospect theory (CPT) to explain farmer choices regarding crop insurance coverage levels (Babcock, 2015). We build upon this framework by deriving willingness to pay (WTP) for insurance programs under alternative assumptions, thus extending the model to incorporate farmer decisions regarding whether or not to purchase insurance. Our contribution is twofold. First, we study the sensitivity of farmer WTP for crop insurance to the inclusion of CPT parameters. We find that loss aversion and probability distortion increase WTP for insurance while risk aversion decreases it. Probability distortion in losses plays a particularly important role. Second, we study the impact of yield distribution skewness on farmer WTP assuming CPT preferences. We find that WTP decreases when the distribution of yields moves from negatively- to positively-skewed and that the combined effect of probability weighting in losses and skewness has a large negative impact on farmer WTP for crop insurance.
    Keywords: skewness,Crop Insurance,Cumulative Prospect Theory,premium subsidy
    Date: 2018–12–07

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