nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2019‒04‒08
six papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Ready for a Carbon Tax? An Explorative Analysis of University Students’ Preferences By Rotaris, Lucia
  2. Counterfactual Sensitivity and Robustness By Timothy Christensen; Benjamin Connault
  3. Tax Morale and Fairness in Conflict - An Experiment By Christoph Engel; Luigi Mittone; Azzurra Morreale
  4. A dynamic model of effort choice in high school By De Groote, Olivier
  5. Testing the binomial fixed effects logit model; with an application to female labor supply By Rainer Winkelmann; Lin Xu
  6. Understanding Spending Habits and Buying Behavior of the American Muslim Community: A Pilot Study By Oral Capps, Jr.; Asma Ahad; Peter S. Murano

  1. By: Rotaris, Lucia
    Abstract: Greenhouse gases emissions are inexorably rising worldwide and the frequency and disruptive power of extreme weather phenomena are dramatically increasing. Although command-and-control and regulation policies have been extensively used to mitigate climate change, more effective and potentially efficient policies are needed to curb the negative externalities produced by human activities. A carbon tax could make the case, but is seldom implemented due to its assumed political unpopularity. In order to estimate the acceptability and the willingness to pay (WTP) for a carbon tax, a contingent valuation experiment was administered in USA and in Italy to a sample of 150 university students. The research is innovative both for the topic chosen, since there are no studies testing the WTP for a carbon tax in the Italian context nor comparing it with the estimates obtained for other countries, and for the methodology used to estimate the WTP, making use of random parameters logit models to obtain individual specific estimates of the median WTP. The results show that the median WTP ranges between a minimum of $161 and a maximum of $242, and varies according to the purposes proposed for the tax revenue use, the respondents’ beliefs and knowledge about climate change, and some sociodemographic characteristics of the respondents (age, gender, and political affiliation). The students’ preferences seem to be quite similar when the nationality of the respondents is taken into account.
    Keywords: Environmental Economics and Policy
    Date: 2017–12–21
  2. By: Timothy Christensen; Benjamin Connault
    Abstract: Researchers frequently make parametric assumptions about the distribution of unobservables when formulating structural models. These assumptions are typically motived by computational convenience rather than economic theory and are often untestable. Counterfactuals can be particularly sensitive to such assumptions, threatening the credibility of structural modeling exercises. To address this issue, we leverage insights from the literature on ambiguity and model uncertainty to propose a tractable econometric framework for characterizing the sensitivity of counterfactuals with respect to a researcher's assumptions about the distribution of unobservables in a class of structural models. In particular, we show how to construct the smallest and largest values of the counterfactual as the distribution of unobservables spans nonparametric neighborhoods of the researcher's assumed specification while other ``structural'' features of the model, e.g. equilibrium conditions, are maintained. Our methods are computationally simple to implement, with the nuisance distribution effectively profiled out via a low-dimensional convex program. Our procedure delivers sharp bounds for the identified set of counterfactuals (i.e. without imposing parametric assumptions about the distribution of unobservables) as the neighborhoods become large. Over small neighborhoods, we relate our procedure to a measure of local sensitivity which is further characterized using an influence function representation. We provide a suitable sampling theory for plug-in estimators. Finally, we apply our procedure to models of strategic interaction and dynamic discrete choice.
    Date: 2019–04
  3. By: Christoph Engel (Max Planck Institute for Research on Collective Goods); Luigi Mittone (University of Trento); Azzurra Morreale (LUT University, Finland)
    Abstract: Arguably, for many citizens the perceived expected disutility from sanctions is smaller than the monetary gain from tax evasion. Nevertheless most people pay their taxes most of the time. In a lab experiment, we show that the willingness to pay taxes even absent enforcement is indeed pronounced. Yet voluntary compliance is reduced if participants learn that income is heterogeneous. The effect is driven by participants with the lowest income. The reduction obtains irrespective of the tax regime. If the tax is proportional to income, or progressive, participants become more skeptical about the willingness of participants with high income to comply.
    Keywords: tax evasion, tax morale, heterogeneity, income inequality, lump sum tax, proportional tax, progressive tax, beliefs, path model
    JEL: C30 C91 D01 D02 D31 D63 D91 H26 K34 K42
    Date: 2019–02
  4. By: De Groote, Olivier
    Abstract: I estimate a dynamic model of educational decisions that allows for observed and unobserved differences in initial ability. Each year students choose their level of effort by deciding over the academic level of their study program and the likelihood of end-of-year performance. Good performance is costly, but necessary to continue in the program. This replaces traditional approaches, which assume performance follows an exogenous law of motion. I use the model to investigate high school tracking policies and obtain the following results: (1) encouraging underperforming students to switch to less academic programs substantially reduces grade retention and dropout, (2) the resulting decrease in the number of college graduates is small and insignicant, and (3) a model that assumes performance is exogenous ignores a change in unobserved study effort, leading to large biases and falsely concluding there would be an important negative impact on graduation rates in higher education.
    Keywords: high school curriculum; early tracking; dynamic discrete choice; CCP estimation
    JEL: C61 I28
    Date: 2019–03–29
  5. By: Rainer Winkelmann; Lin Xu
    Abstract: Regression models for proportions are frequently encountered in applied work. The condi- tional expectation is bound between 0 and 1 and, therefore, must be non-linear which requires non-standard panel data extensions. The quasi-maximum likelihood estimator of Papke and Wooldridge (1996) suffers from the incidental parameters problem when including fixed effects. In this paper, we re-consider the binomial panel logit model with fixed effects (Machado, 2004). We show that the conditional maximum likelihood estimator is very easy to implement using standard software. We investigate the properties of the estimator under misspecification and derive a new test for overdispersion in the binomial fixed effects logit model. Models and test are applied in a study of contracted work-time percentage, measured as proportion of full-time work, for women in Switzerland.
    Keywords: Proportions data, unobserved heterogeneity, conditional maximum likelihood, overdispersion
    JEL: C23 J21
    Date: 2019–04
  6. By: Oral Capps, Jr.; Asma Ahad; Peter S. Murano
    Abstract: This study provides a baseline for the spending habits and buying preferences of American Muslims lacking in the extant literature. We examine American Muslims’ food and beverage spending habits and buying behaviors with regard to halal products using a survey of 195 individuals from the Chicago metropolitan area and a discrete choice modeling framework. The chief drivers in the decision to purchase food and beverage items were the purchase of halal beef, the amount spent weekly in grocery stores, the frequency of hosting Ramadan, household income and size, and ethnicity (in that order).
    Keywords: Agribusiness, Agricultural and Food Policy, Institutional and Behavioral Economics
    Date: 2017–11–01

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