nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2020‒03‒09
eight papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Understanding Migration Aversion Using Elicited Counterfactual Choice Probabilities By Gizem Kosar; Tyler Ransom; Wilbert van der Klaauw
  2. Consumers’ willingness to pay for plants protected by beneficial insects—Evidence from two stated-choice experiments with different subject pools By Lehberger, Mira; Gruener, Sven
  3. Demand for Electricity on the Global Electrification Frontier By Robin Burgess; Michael Greenstone; Nicholas Ryan; Anant Sudarshan
  4. Local knowledge spillovers and innovation persistence of firms By Holl, Adelheid; Peters, Bettina; Rammer, Christian
  6. The Value of Verbal Feedback in Allocation Decisions By Robert J., Schmidt; Christiane, Schwieren; Martin, Vollmann
  7. Generalized Costs of Travel by Solo and Pooled Ridesourcing vs. Privately Owned Vehicles, and Policy Implications By Fulton, Lew PhD; Brown, Austin PhD; Compostella, Junia
  8. Willingness to Pay for Electricity Access in Extreme Poverty : Evidence from Sub-Saharan Africa By Sievert,Maximiliane; Steinbuks,Jevgenijs

  1. By: Gizem Kosar; Tyler Ransom; Wilbert van der Klaauw
    Abstract: This paper investigates how migration and location choice decisions depend on a large set of location characteristics, with particular focus on measuring the importance and nature of the non-monetary cost of moving. We employ a stated-preference approach to elicit respondents’ choice probabilities for a set of hypothetical choice scenarios, using two waves from the NY Fed’s Survey of Consumer Expectations. Our hypothetical choice methodology elicits choice probabilities from which we recover the distribution of individual-level preferences for location and mobility attributes without concerns about omitted variables and selection biases that hamper analyses based on observed mobility choices alone. We estimate substantial heterogeneity in the willingness-to-pay (WTP) for location characteristics, both across and within demographic groups. Our results also indicate evidence of sorting into current locations based on preferences for these attributes as well as a strong negative association between respondents’ non-monetary moving costs and their moving expectations and actual mobility decisions.
    Keywords: subjective probabilities, stated choice methodology, migration, location choice
    JEL: J61 R23 D84
    Date: 2020
  2. By: Lehberger, Mira; Gruener, Sven
    Abstract: We investigate consumers’ willingness to pay for plants protected by biological insects and those protected by pesticides, respectively, as well as the influence of message framing on willingness to pay. We use basil, heather, and orchids as experimental objects and find evidence from two experiments that consumers prefer plants protected by biological insects. Moreover, we find that message framing affects consumers’ willingness to pay, where gain framing produces greater overall willingness to pay. To check for the robustness of our results, we implemented instruments to mitigate concerns for social desirability and hypothetical bias, finding that our results are robust in terms of our key findings. This is the first comprehensive experimental study specifically on consumer’s willingness to pay for plants protected by beneficial insects. Our findings are also valuable for practitioners, as the use of biological insects in under-glass production systems is already common. Following our results, this information could be successfully used for marketing purposes.
    Date: 2020–02–18
  3. By: Robin Burgess ([Dept of Economics, LSE); Michael Greenstone (Dept of Economics, University of Chicago); Nicholas Ryan (Cowles Foundation, Yale University); Anant Sudarshan (Energy Policy Institute at Chicago, University of Chicago)
    Abstract: Nearly a billion people, mostly in rural Africa and South Asia, do not have electricity at home. The advent of off-grid solar power means that many of these households, at the frontier of global electriï¬ cation, have a choice between competing sources of electricity. This paper studies the demand for electricity with a discrete choice model wherein households choose between grid electricity, several off-grid electricity sources, and having no electricity at all. The model is estimated using a randomized experiment that varied the price of solar microgrids for a sample of villages in the state of Bihar, India, an outpost on the global electriï¬ cation frontier. There are three main ï¬ ndings. First, households value electricity, but demand for any one electricity source is highly elastic, because several sources provide similar energy services at similar prices. Second, even in a relatively poor, rural sample, richer households greatly prefer grid electricity. Third, future growth in income will drive an increase in electriï¬ cation due mainly to new grid connections, even if the cost of solar continues to fall. Our analysis suggests that off-grid solar power provides an important stop-gap technology, which ï¬ lls the space between having no electricity at all and grid electricity, but that the future will run on the grid.
    Keywords: Energy access, Solar electrification, Electricity demand, Field experiment
    JEL: O13 Q41 Q21 C93
    Date: 2020–02
  4. By: Holl, Adelheid; Peters, Bettina; Rammer, Christian
    Abstract: Recent empirical evidence has shown that firm's innovation behavior exhibits high persistency but not much is known about potential contingencies affecting the degree of persistence. This paper focuses on the role of the local knowledge environment and asks how local knowledge spillovers affect firms' innovation persistence. The empirical analysis draws upon a representative panel data set of firms in Germany from 2002-2016, complemented by detailed geographic information of patent activity over discrete distances to proxy local knowledge spillovers. Based on correlated random effects probit models that control for state dependence, unobserved individual heterogeneity and endogenous initial conditions, our results corroborate former evidence that persistency in innovation is driven by true state dependence. More importantly, we find that the local patenting activity positively moderates firms' degree of persistency in innovation behavior. This is a novel firm-level mechanism that can explain the widening of spatial disparities in innovation performance. Estimations with different distance bands show that the strength of knowledge spillovers that contribute to innovation persistence via true state dependence declines rather rapidly with increasing distance.
    Keywords: innovation,persistence,location,knowledge spillovers
    JEL: O31 R1 D22
    Date: 2020
  5. By: Belay, Getachew
    Keywords: Consumer/Household Economics, Resource /Energy Economics and Policy
    Date: 2018–11
  6. By: Robert J., Schmidt; Christiane, Schwieren; Martin, Vollmann
    Abstract: Depending on the context at hand, people’s preference for receiving feedback might differ. Especially in allocation decisions that directly concern another individual, feedback from the affected person can have positive or negative value. We study such preferences in a laboratory experiment by eliciting the willingness-to-pay to receive or to avoid verbal feedback from subjects that were previously affected by an allocation decision. We find that most decision makers exhibit a positive willingness-to-pay for having control about whether feedback occurs or not. Specifically, decision makers that equally shared their endowment with the recipient revealed a positive willingness-to-pay for receiving, but not for avoiding feedback. By contrast, among decision makers that behaved selfishly, we identify both: subjects that were willing to pay for receiving and subjects that were willing to pay for avoiding feedback. The stated motivations indicate that curiosity, the desire to receive social approval and giving the recipient the chance to express his/her feelings are the main reasons for feedback acquisition, while shame and fear of negative feedback are the main reasons for avoidance.
    Keywords: feedback; communication; non-instrumental information; social preferences; information avoidance; curiosity
    Date: 2020–02–28
  7. By: Fulton, Lew PhD; Brown, Austin PhD; Compostella, Junia
    Abstract: The emergence of “3 Revolutions” in transportation (automation, electrification and shared mobility) presents a range of questions regarding how consumers will travel in the future, and under what conditions there may be rapid adoption of various services. These include individual on-demand taxi-style services, shared mobility in pooled services, and use of public transit, all with or without drivers. There is now enough data and estimates on the costs of these service combinations, and in some cases ridership data, to consider how consumers are making choices and could do so in the future as things evolve. This project involved: (a) reviewing existing literature and data on consumer mode and vehicle choice; (b) developing new “generalized cost” estimates that combine monetary and non-monetary (e.g., hedonic) components of travel choice, notably incorporating value of time; and (c) conducting a comparison of monetary and generalized trip cost for a range of trip types across travel options in the near term (2020) and longer term (2030-35). Three main travel options were considered: privately owned vehicles, ridesourced solo trips, and ridesourced pooled trips. Consideration of internal combustion vs. battery electric and, in the longer term, automated technology was also core to the analysis. The trips considered include urban and suburban types in the San Francisco metro area, using actual trip characteristics. The results suggest that in the near-term, solo ridesourcing is likely to be perceived as significantly more expensive (in terms of monetary and time costs) than pooled ridesourcing or solo private vehicle trips except for those with a very high value of time. Solo ridesourcing does better in dense, slow, urban trips than in faster suburban trips. In the longer term, with automated driverless vehicles, solo ridesourcing could become the cheapest mode for many travelers in a range of situations. This report includes an initial consideration of the implications of these policies for affecting travel choices, presumably to push choices toward pooled ridesourcing as a sustainable option. VMT-based pricing, pricing that could be adjusted with vehicle occupancy, and parking-related approaches are described. A large price signal might be needed to shift travel, given some of the differences in generalized cost found in this analysis.
    Keywords: Engineering, Ridesourcing, ridesharing, vehicle sharing, travel costs, travel behavior, autonomous vehicles, automobile ownership, policy analysis
    Date: 2020–02–01
  8. By: Sievert,Maximiliane; Steinbuks,Jevgenijs
    Abstract: Improving electricity access in low-income countries is a challenging problem because of the high costs of grid extension and low demand for grid electricity in rural areas. This study elucidates these constraints by analyzing poor households'willingness-to-pay for different types of electricity access, including lower cost off-grid technologies. The theoretical model illustrates how consumer preferences, operational and capital costs of electricity service delivery, and availability of power supply affect households'decisions to acquire electricity technology. These effects are then assessed empirically by estimating beneficiaries'willingness-to-pay for electricity in three low-income countries that have pockets of households living in extreme poverty -- Burkina Faso, Senegal, and Rwanda. Consistent with the theoretical model, the results indicate very low household willingness-to-pay for electricity access, and that willingness-to-pay diminishes as households'income declines. Therefore, the study recommends concentrating in the nearer term on ultra-low-cost decentralized off-grid solar technologies in programs to provide household electricity to the poor in rural areas.
    Keywords: Energy Policies&Economics,Electric Power,Energy Demand,Energy and Mining,Energy and Environment,Energy Technology&Transmission,Inequality
    Date: 2019–06–20

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