nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2019‒06‒17
six papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Household Preferences for Load Restrictions: Is There an Effect of Pro-Environmental Framing? By Broberg, Thomas; Melkamu Daniel , Aemiro; Persson, Lars
  2. Impact of social comparison on DSM in Poland By Bernadeta Gołębiowska; Anna Bartczak; Wiktor Budziński
  3. On the Formulation of the Alternative Scenario in Cost-Benefit Analysis By Johansson, Per-Olov; Kriström, Bengt
  4. Autonomous Driving and Residential Location Preferences: Evidence from a Stated Choice Survey By Rico Krueger; Taha H. Rashidi; Vinayak V. Dixit
  5. Valuing Mortality Risk in China: Comparing Stated-Preference Estimates from 2005 and 2016 By Hammitt, James K.; Geng, Fangli; Guo, Xiaoqi; Nielsen, Chris P.
  6. Counterfactual Inference for Consumer Choice Across Many Product Categories By Rob Donnelly; Francisco R. Ruiz; David Blei; Susan Athey

  1. By: Broberg, Thomas (CERE - the Center for Environmental and Resource Economics); Melkamu Daniel , Aemiro (CERE - the Center for Environmental and Resource Economics); Persson, Lars (CERE - the Center for Environmental and Resource Economics)
    Abstract: In this paper we investigate if a pro-environmental framing influences households' stated willingness to accept restrictions on their electricity use. We use a split-sample choice experiment (CE) and ask respondents to choose between their current electricity contract and hypothetical contracts featuring various load controls and a monetary compensation. Our results indicate that the pro-environmental framing have little impact on the respondents' choices. We observe a significant framing effect on choices and marginal willingness-to-accept (MWTA) for only a few contract attributes. The results further suggest that there is no significant framing effect among households that engage in different pro-environmental activities.
    Keywords: Choice experiment; Demand response; Electricity contract; Load management; Pro-environmental framing; Willingness to accept
    JEL: C25 D83 Q51 Q54
    Date: 2019–06–12
  2. By: Bernadeta Gołębiowska (Faculty of Economic Sciences, University of Warsaw); Anna Bartczak (Faculty of Economic Sciences, University of Warsaw); Wiktor Budziński (Faculty of Economic Sciences, University of Warsaw)
    Abstract: Poland’s energy strategy prioritizes long-term energy security, energy efficiency, reducing greenhouse gas emissions. The country’s progress toward sustainable development requires in-depth analyses of possible solutions. In our study we investigate consumers’ preferences for Demand Side Management programs for electricity usage in Poland. We apply a discrete Choice Experiment framework for various electricity contracts implying the external control of electricity usage. The main objective of the study is to investigate the value of potential disutility of Polish households from the energy management. Additionally, we elaborate on the effect of social comparison between households’ electricity use on the acceptance of new electricity contracts. The results suggest that people require substantial compensations to accept the external control of electricity in extreme cases and in weekdays during certain hours. Turning to the social comparison, we were expecting that people with a higher electricity usage per person in a household will require lower compensations, however we observe the opposite result. The respondents who were informed that they use more electricity than an average person in his administrative district seem to feel higher discomfort from the external electricity control. This suggest that the effect of social comparison might be overbalanced by the differences in perceived utility from electricity usage.
    Keywords: choice experiment; demand side management; electricity, social comparison, willingness to accept
    JEL: C25 D19 D91 Q41 Q48
    Date: 2019
  3. By: Johansson, Per-Olov (CERE - the Center for Environmental and Resource Economics); Kriström, Bengt (CERE - the Center for Environmental and Resource Economics)
    Abstract: In this note we discuss how a cost–benefit analysis could be formulated in a second-best world where lump-sum taxation is not available. The question is how the government’s budget is balanced. Different options are available. A value added tax or an income tax or a profit tax could be adjusted so as to balance the budget. Alternatively, expenditures on public or private goods are displaced. A variation occurs if the government has a policy target. For example, a certain number of hectares of valuable forest areas should be preserved. Then, the central part of a cost–benefit analysis is to compare the costeffectiveness of different policy instruments that can be used to achieve the target. However, there are also deadweight losses provided there are distortionary taxes. Such considerations also opens up for a broader formulation of the valuation question in willingness-to-pay experiments than one based on lump-sum taxation.
    Keywords: Cost–effectiveness; cost–benefit analysis; second best; policy targets; deadweight losses; forestry; conservation; contingent valuation; choice experiments.
    JEL: H41 I39 Q23 Q57
    Date: 2019–06–10
  4. By: Rico Krueger; Taha H. Rashidi; Vinayak V. Dixit
    Abstract: This paper seeks to advance the understanding of the potential impacts of autonomous vehicles (AVs) on travel behaviour and land use by investigating stated preferences for combinations of residential locations and travel options for the commute in the context of autonomous automobile travel. Our analysis draws from a stated preference survey, which was completed by 512 commuters from the Sydney metropolitan area in Australia, and provides insights into travel time valuations and demand elasticities in a long-term decision-making context. By and large, the findings of our empirical study suggest that the impact of AVs on travel behaviour and residential location preferences may be relatively modest. We estimate that the mean value of travel time savings (VOT) for commuting by AV is 24.0 AUD/h, while the mean VOTs for commuting by conventional car and public transit are 25.3 AUD/h and 19.0 AUD/h, respectively.
    Date: 2019–05
  5. By: Hammitt, James K.; Geng, Fangli; Guo, Xiaoqi; Nielsen, Chris P.
    Abstract: We estimate the marginal rate of substitution of income for reduction in current annual mortality risk (the “value per statistical life” or VSL) using stated-preference surveys administered to independent samples of the general population of Chengdu China in 2005 and 2016. We evaluate the quality of estimates by the theoretical criterion that WTP for risk reduction should be strictly positive and nearly proportional to the magnitude of the risk reduction (evaluated by comparing answers between respondents). We test the effect of excluding respondents whose answers violate these validity criteria. For subsamples of respondents that satisfy the criteria, point estimates of the sensitivity of WTP to risk reduction are consistent with theory and yield estimates of VSL that are two to three times larger than estimated using the full samples. Between 2005 and 2016, estimated VSL increased sharply, from about 22,000 USD in 2005 to 550,000 USD in 2016. Income also increased substantially over this period. Attributing the change in VSL solely to the change in income implies an income elasticity of about 2.5.
    Keywords: value per statistical life; stated preference; willingness to pay
    JEL: D61 H43 I18 Q51
    Date: 2019–06–14
  6. By: Rob Donnelly; Francisco R. Ruiz; David Blei; Susan Athey
    Abstract: This paper proposes a method for estimating consumer preferences among discrete choices, where the consumer chooses at most one product in a category, but selects from multiple categories in parallel. The consumer's utility is additive in the different categories. Her preferences about product attributes as well as her price sensitivity vary across products and are in general correlated across products. We build on techniques from the machine learning literature on probabilistic models of matrix factorization, extending the methods to account for time-varying product attributes and products going out of stock. We evaluate the performance of the model using held-out data from weeks with price changes or out of stock products. We show that our model improves over traditional modeling approaches that consider each category in isolation. One source of the improvement is the ability of the model to accurately estimate heterogeneity in preferences (by pooling information across categories); another source of improvement is its ability to estimate the preferences of consumers who have rarely or never made a purchase in a given category in the training data. Using held-out data, we show that our model can accurately distinguish which consumers are most price sensitive to a given product. We consider counterfactuals such as personally targeted price discounts, showing that using a richer model such as the one we propose substantially increases the benefits of personalization in discounts.
    Date: 2019–06

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