nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2020‒03‒30
seven papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Household preferences for new heating systems: Insights from a multi-country discrete choice experiment By Schleich, Joachim; Faure, Corinne; Guetlein, Marie-Charlotte; Tu, Gengyang
  2. Preferences for demand side management—a review of choice experiment studies By Bernadeta Gołębiowska
  3. Do preferences for private labels respond to supermarket loyalty programs? By Florez-Acosta, Jorge
  4. Fleeing from hurricane Irma: Empirical analysis of evacuation behavior using discrete choice theory By Wong, Stephen D; Pel, Adam J; Shaheen, Susan A; Chorus, Caspar G
  5. Using Referenda to Improve Targeting and Decrease Costs of Conditional Cash Transfers By Alix-Garcia,Jennifer M.; Sims,Katharine R. Emans; Phaneuf,Daniel J.
  6. Unobserved Worker Quality and Inter-Industry Wage Differentials By Ge, Suqin; Macieira, João
  7. On bootstrapping tests of equal forecast accuracy for nested models By Firmin Doko Tchatoka; Qazi Haque

  1. By: Schleich, Joachim; Faure, Corinne; Guetlein, Marie-Charlotte; Tu, Gengyang
    Abstract: This paper employs identical demographically representative discrete choice experiments (DCEs) on new heating systems with owner-occupier households in Poland, Sweden, and the United Kingdom (UK) to estimate respondent will-ingness-to-pay (WTP) for rebates, heating cost savings, installation time (re-flecting "hassle costs") and warranty length. The results from estimating coun-try-specific mixed logit models suggest that participants generally value rebates for new heating systems, but valuation differs substantially across countries and was found to be highest for Poland. For Sweden (but not for Poland or the UK), rebates appeared more effective if offered by a public rather than a private fund-ing source. Because higher income households in the UK value rebates more than lower income households, rebates may be regressive. The results for heat-ing cost savings in the three countries imply static payback times of ten to fif-teen years for more energy-efficient heating systems. We further find that re-spondents have a strong dislike for longer installation time and a high WTP for longer warranty times.
    Keywords: energy efficiency,energy efficiency obligations,heating systems,hassle costs,energy efficiency paradox,choice experiment
    Date: 2020
  2. By: Bernadeta Gołębiowska (Faculty of Economic Sciences, University of Warsaw)
    Abstract: This review of choice experiment (CE) studies deals with the valuation of electricity supply attributes in the residential sector. We consider the willingness to pay and the willingness to accept changes in the electricity supply. The results could be used to determine consumers’ preferences for demand-side management (DSM) programs and could serve as a reference for formulating policies. DSM is an option for constructing a low-carbon electricity system, improving energy efficiency, and achieving the sustainable development of an economy. The results from CEs justify investment in new solutions. The research shows that consumers are open to DSM, but they prefer simple programs to complex ones. Decision-makers could introduce DSM programs that enable power outages and provide compensation for households. The societal advantages of DSM are not obvious to consumers, so the implementation of DSM requires communication and more research on peoples’ preferences.
    Keywords: choice experiments, demand-side management, energy, households, review
    JEL: C25 D19 Q41 Q48
    Date: 2020
  3. By: Florez-Acosta, Jorge
    Abstract: This paper examines the effects of supermarket loyalty programs on the demand for private labels (PLs). Using transaction level data on grocery purchases and individual level information on the membership of loyalty programs, I estimate a model of demand in which membership may affect the consumers' valuation for PLs, their sensitivity to price changes and have spillover effects on both named brands (NBs) and rivals' PLs. My identification strategy of the membership effect exploits observed variation in shopping patterns at the consumer level over time and across customer types (i.e., members and non-members) in each period to control for as much exogenous variation as possible, and includes a control function using characteristics of loyalty programs as instrumental variables to account for a potential selection bias related to unobserved factors of the membership decision. I find a significant effect of loyalty programs on consumer preferences for PLs. Compared to non-members, membership reduces consumers' price sensitivity for the products sold by the supermarket they are members of, but increases it for products sold by supermarkets they are not members of. These effects are weaker for households that are members of the loyalty programs of multiple supermarkets. Counterfactual simulations show that when a supermarket modifies its loyalty program while competitors keep their own unchanged, it loses about 19% of customers to its rivals, on average. Furthermore, if loyalty programs were changed altogether, the demand for PLs would considerably decrease, while the demand for NBs would increase.
    Keywords: Supermarket chains; Loyalty programs; Private labels; Discrete choice models; Random coefficients; Control function approach
    JEL: D12 L13 L66
    Date: 2020–03
  4. By: Wong, Stephen D; Pel, Adam J; Shaheen, Susan A; Chorus, Caspar G
    Keywords: Engineering
    Date: 2020–02–01
  5. By: Alix-Garcia,Jennifer M.; Sims,Katharine R. Emans; Phaneuf,Daniel J.
    Abstract: Cost-effective allocation of conditional cash transfers (CCT) requires identifying recipients with low opportunity costs who might change behavior. This paper develops a low-cost approach for improving program implementation by using a stated preference, referendum-style survey question to calculate willingness to accept (WTA) for CCT contracts. This is illustrated in the context of Mexico's Payments for Ecosystem Services Program, with the paper finding that the estimated social cost based on WTA is substantially lower than actual payments. Simulation of three geographic targeting approaches shows that joint selection using deforestation risk and WTA could increase program impact under the same budget. The paper also simulates modified payment schedules based on predicted WTA and demonstrates that these could reduce program cost.
    Keywords: Environmental Disasters&Degradation,Global Environment,Conditional Cash Transfers,Services&Transfers to Poor,Disability,Access of Poor to Social Services,Economic Assistance,Biodiversity,Global Environment Facility
    Date: 2019–01–17
  6. By: Ge, Suqin; Macieira, João
    Abstract: This study quantitatively assesses two alternative explanations for inter-industry wage differentials: worker heterogeneity in the formof unobserved quality and firmheterogeneity in the form of a firm's willingness to pay (WTP) for workers' productive attributes. We develop an empirical hedonic model of labor demand and apply a two-stage nonparametric procedure to recover worker and firm heterogeneities. In the first stage we recover unmeasured worker quality by estimating market-specific hedonic wage functions nonparametrically. In the second stage we infer each firm's WTP parameters for worker attributes by using first-order conditions from the demand model. We apply our approach to quantify inter-industry wage differentials on the basis of individual data from the NLSY79 and find that worker quality accounts for approximately two thirds of the inter-industry wage differentials.
    Keywords: hedonic models, inter-industry wage di§erentials, labor quality, wage determination
    JEL: J31 J24 C51 M51
    Date: 2020
  7. By: Firmin Doko Tchatoka (School of Economics, The University of Adelaide); Qazi Haque (Economics Discipline, Business School, University of Western Australia and Centre for Applied Macroeconomic Analysis, Australian National University)
    Keywords: Out-of-sample forecasts; HAC estimator; Moving block bootstrap; Bootstrap consistency
    JEL: C12 C15 C32
    Date: 2020

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