nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2020‒02‒17
eight papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Valuing externalities of outdoor advertising in an urban setting – the case of Warsaw By Mikołaj Czajkowski; Michał Bylicki; Wiktor Budziński; Mateusz Buczyński
  2. 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
  3. Choosing the Mode of Transport – Case Study of Bratislava Region By Richard Kalis; Daniel Dujava
  4. Individual preferences regarding pesticide-free management of green-spaces: a discret choice experiment with French citizens. By Marianne Lefebvre; Pauline Laille; Masha Maslianskaia-Pautrel
  5. Discrete Choice under Oaths By Nicolas Jacquemet; Stephane Luchini; Jason Shogren; Verity Watson
  6. Estimating the Welfare Effects of School Vouchers By Vishal Kamat; Samuel Norris
  7. Willingness to take care of good cars: from the theorem of lemons to the Coase theorem By Malakhov, Sergey
  8. Data-Driven Behavior Analysis and Implications in Plug-in Electric Vehicle Policy Studies By Ji, Wei

  1. By: Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Michał Bylicki (Faculty of Economic Sciences, University of Warsaw); Wiktor Budziński (Faculty of Economic Sciences, University of Warsaw); Mateusz Buczyński (Faculty of Economic Sciences, University of Warsaw)
    Abstract: Outdoor advertising produces externalities, such as visual pollution, that have to be considered in cityscape planning. In recent years, opposition to excessive outdoor advertising in Poland has grown, resulting in the enactment of new regulations in 2015: The Landscape Bill. It allows local authorities to limit outdoor advertising in their municipality. We present the results of a stated preference study aimed at estimating the value that people attach to the reductions of outdoor advertising in Warsaw, the capital of Poland. We considered two types of outdoor advertising mediums: free-standing ads and on-building ads, alongside five levels of advertising reduction. We find that inhabitants of Warsaw prefer regulating and limiting the amount of outdoor advertising and we quantify their willingness to pay for such a policy. The most preferred level of free-standing ads was a 75% reduction, for which the people of Warsaw are willing to pay 5.6 million EUR annually in the form of increased prices and rents to compensate owners’ losses. For on-building ads, total ban was the most preferred, valued at 11.3 million EUR per year. Socio-demographic drivers of people’s willingness to pay are explored. Overall, our study demonstrates how stated preference methods can be used for informing urban landscape policies and adds to the ongoing debate surrounding outdoor advertising.
    Keywords: Outdoor advertising; public preferences; stated preference methods; discrete choice experiment; willingness to pay
    JEL: R52 D12 D62
    Date: 2020
  2. By: Mahmud,Minhaj; Gutierrez,Italo A.; Kumar,Krishna B.; Nataraj,Shanthi
    Abstract: This study uses a choice experiment among 2,000 workers in Bangladesh to elicit willingness to pay (WTP) for job attributes: a contract, termination notice, working hours, paid leave, and a pension fund. Using a stated preference method allows calculation of WTP for benefits in this setting, despite the lack of data on worker transitions, and the fact that many workers are self-employed, which makes it difficult to use revealed preference methods. Workers highly value job stability: the average worker would be willing to forego a 27 percent increase in income to obtain a 1-year contract (relative to no contract), or to forego a 12 percent increase to obtain thirty days of termination notice. There is substantial heterogeneity in WTP by type of employment and gender: women value shorter working hours more than men, while government workers place a higher value on contracts than do private sector employees.
    Keywords: Labor Markets,Labor Standards,Rural Labor Markets,Educational Sciences,Employment and Unemployment,Gender and Development
    Date: 2020–01–13
  3. By: Richard Kalis; Daniel Dujava
    Abstract: We analyse commuting patterns in Bratislava’s fast growing sub-urban region with suboptimal developed infrastructure. Standardized discrete choice model is used to estimate demand for individual car transport as well as for public buses and trains and to obtain corresponding elasticities with respect to travel costs, times and income. We find low rate of substitution between available modes. Direct price elasticity for public modes is in accordance with often cited rule of thumb -0.3. Negative income elasticities of demand for buses and trains, together with low direct price elasticity for car transport can be hard to overcome when looking for solution of current traffic problems in the region. We use modelled demand to predict effects of two recently proposed policies - new parking system in Bratislava city and construction of highway D4R7. In case of first policy, we expect massive reduction in car usage due to increased costs for car commuters. On the other hand, new highway would have only limited impact on mode choice and could reduce number of train commuters.
    Keywords: Elasticities, Mode-choice, Nested Logit Model, Transportation
    JEL: R41 R42 R48
    Date: 2019–08–27
  4. By: Marianne Lefebvre (GRANEM IUT Université d'Angers); Pauline Laille (Plante&Cité); Masha Maslianskaia-Pautrel (GRANEM Université d'Angers)
    Abstract: To comply with the pesticide ban in effect in French urban green spaces (UGSs), managers have to modify their practices and organize the transition towards pesticide-free UGSs. Understanding citizens' preferences for UGSs whose characteristics are modified by the pesticide ban is a useful complement to technical research on alternatives to pesticides. We rely on a Discrete Choice Experiment (DCE) ran on-line on a representative sample of the French population to analyze preferences towards characteristics of direct interest for the users (visual aspect, recreational opportunities and information campaign on pesticide-free UGSs), as well as less visible characteristics such as the fauna abundance, the working conditions or the budget dedicated to the maintenance of such areas. We find that all chosen attributes have a significant impact on respondents' choice of UGS option. The results show the importance of accounting for participants' heterogeneity. All citizens largely devalue options with a major increase in budget. But preferences towards other attributes are shapped by visit frequency to UGSs. The natural visual aspect is prefered by most users compares to the controlled aspect, but it is even more true for frequent visitors. Visit frequency affects in particular preferences towards fauna abundance (only valued by those who frequently visit UGSs), information campaign (only valued by those who do not frequently visit UGSs) and budget dedicated to UGSs (accepted by frequent visitors, but only if it remains limited).
    Keywords: Discrete choice experiment, Urban green spaces, Pesticides, Individual preferences, France
    JEL: Q24 Q26 C25
    Date: 2020–02
  5. By: Nicolas Jacquemet (PSE - Paris School of Economics, UP1 - Université Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stephane Luchini (Aix-Marseille School of Economics [Aix-Marseille Université] - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - Centre de la Vieille Charité [Aix-Marseille Université]); Jason Shogren (UW - University of Wyoming); Verity Watson (Health Economics Research Unit - University of Aberdeen)
    Abstract: Using discrete choices to elicit preferences is a major tool to help guide public policy. Although Discrete Choice Experiment (DCE) remains by far the most popular mechanism used to elicit preferences, its reliability still is questionable. Using an induced value experimental design, we show that standard benchmarks achieve no more than 56% (hypothetical answers with no monetary incentives) to 60% (real monetary incentives) of payoff maximizing choices. Herein we demonstrate that having respondents sign a the truth-telling oath reduces non-payoff maximizing choices by nearly 50% relative to these benchmarks. The explicit and voluntary commitment to honesty improved decisions. Further, we show that it is the explicit commitment to honesty induced by the truth-telling oath improves choices, not just any oath mechanism, i.e., an oath to task or to duty did not improve choices.
    Keywords: Discrete Choice Experiments,Stated Preferences,Oath,Truth-telling,External validity,Welfare
    Date: 2019–05
  6. By: Vishal Kamat; Samuel Norris
    Abstract: We analyze the welfare effects of voucher provision in the DC Opportunity Scholarship Program (OSP), a school voucher program in Washington, DC, that randomly allocated vouchers to students. To do so, we develop new discrete choice tools to show how to use data with random allocation of school vouchers to characterize what we can learn about the welfare benefits of providing a voucher of a given amount, as measured by the average willingness to pay for that voucher, and these benefits net of the costs of providing that voucher. A novel feature of our tools is that they allow specifying the relationship of the demand for the various schools with respect to prices to be entirely nonparametric or to be parameterized in a flexible manner, both of which do not necessarily imply that the welfare parameters are point identified. Applying our tools to the OSP data, we find that provision of the status-quo as well as a wide range of counterfactual voucher amounts has a positive net average benefit. We find these positive results arise due to the presence of many low-tuition schools in the program, removing these schools from the program can result in a negative net average benefit.
    Date: 2020–01
  7. By: Malakhov, Sergey
    Abstract: The study of the marginal scenario of the theorem of lemons under the total failure of the market of used cars – nobody buys, but everybody gets taxi – shifts the analysis of the equilibrium down from the level of cars to the level of mileage, because the market of used cars stays under the pressure of options whether to buy or to lease and whether to rent a car or to get taxi. The buying of a car with regard to the demand for mileage represents the purchase of input for home production where driving like gardening and pets’ care can provide a direct utility but is also something one can purchase on the market. The equilibrium price of a mile equalizes the willingness to pay of shoppers, consumers with zero search&maintenance costs, and the willingness to accept or to sell of searchers, consumers with positive search&maintenance costs. The practice to sell rights for queue jumping and illegal taxicab operations illustrate the arbitrage between shoppers’ willingness to pay and searchers’ willingness to accept. The analysis of choice between a good high-mileage car and a bad aged low-mileage car goes beyond the traditional considerations on status purchases and describes the phenomenon of the consumers’ willingness to take care of good cars. The willingness to take care increases after-the-purchase costs of ownership above the level of standard technological maintenance costs. As a result, after-the-purchase costs of ownership per mile for high-mileage cars become greater than for aged low-mileage cars. The willingness to take care of big-ticket items supports the demand and sellers of good cars do not quit the market. The willingness to take care redistributes used cars, i.e., assets for the home production of miles, for its more efficient use and cleans up the way to the Coase theorem.
    Keywords: theorem of lemons, Coase theorem, equilibrium price dispersion, optimal consumption-leisure choce, willingness to take care, endowment effect
    JEL: D11 D83
    Date: 2019
  8. By: Ji, Wei
    Abstract: The adoption of plug-in electric vehicles (PEVs) is considered to be a potential solution to reduce transportation-related emissions. People’s vehicle choice and driving behavior will have important implications for the realized emissions reductions from PEVs. Therefore, PEV-related policy studies require good understanding of human behavior. Traditional approaches to analyze travel behavior are mostly to build analytic models based on assumptions because of the limited accuracy and information of data. With the development of sensor technology, there are more methods than ever to collect accurate and informative behavioral data, so the crucial consideration is how to creatively use these data to better understand people’s behavior. This dissertation proposed some data-driven approaches to simulate behavior and provided a discussion of the implications for three PEV-related topics. The first study explored the potential of greenhouse gas (GHG) reductions that can be achieved with adoption of PEVs in California by simulating vehicles’ emissions based on tracing data. It was found that assigning the right model of PEVs to drivers can help to reduce annual GHG emissions by 65%, compared to everyone driving a Toyota Corolla. The second study presented a tool to evaluate the spatial distribution of fast charging demand and to assess how much a charger in a certain location would be used based on travel diary. Scenario analysis illustrated that en-route fast charging demand will shift from primarily inside metro areas to long distance corridors outside metro areas as the battery size increases. The third study estimated the value of Clean Air Vehicle (CAV) decals by simulating the frequency of PEV owners’ access to high occupancy vehicle/toll (HOV/T) lanes based on survey data. The results indicated that the CAV Decals Program is one of the most attractive incentive policies, but there is spatial heterogeneity of CAV decal value across different regions.
    Keywords: Engineering, Social and Behavioral Sciences
    Date: 2018–09–01

This nep-dcm issue is ©2020 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.
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