nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2020‒07‒27
nine papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Interdependence in active mobility adoption: Joint modelling and motivational spill-over in walking, cycling and bike-sharing By M Said; A Biehl; A Stathopoulos
  2. The effects of presentation formats in choice experiments By Genius Murwirapachena; Johane Dikgang
  3. Incentivizing and retaining public servants in remote areas: A discrete choice experiment with agricultural extension agents in Ethiopia By Regassa, Mekdim D.; Abate, Gashaw T.; Kubik, Zaneta
  4. Mixed Logit Models and Network Formation By Harsh Gupta; Mason A. Porter
  5. The value of online banking to small and medium- sized enterprises: evidence from firms operating in the UAE free trade zones By Parvaneh Shahnoori; Glenn P. Jenkins
  6. Why Do Buyers Pay Different Prices for Comparable Products? Evidence from the Housing Market By Ralph Siebert; Michael J. Seiler
  7. A Comparison of EU and US Consumers' Willingness to Pay for Gene-edited Food: Evidence from Apples By Stéphan Marette; Anne-Célia Disdier; John C. Beghin
  8. Identification and Estimation of Demand for Bundles By Iaria, Alessandro; WANG, Ao
  9. ivcrc: An Instrumental Variables Estimator for the Correlated Random Coefficients Model By David Benson; Matthew A. Masten; Alexander Torgovitsky

  1. By: M Said; A Biehl; A Stathopoulos
    Abstract: Active mobility, traditionally referring to modes requiring physical activity to operate, offers an array of physical, emotional, and social well-being benefits. However, with the proliferation of the sharing economy, new nonmotorized means of transport are entering the fold, complementing some existing mobility options while competing with others. The purpose of this research is to investigate the adoption of three active travel modes, namely walking, cycling and bike-sharing, in a joint modeling framework. The analysis is based on an adaptation of the stages of change framework, which originates from the health behavior sciences. The development of a multivariate ordered probit model drawing on U.S. survey data provides well-needed insights into individuals preparedness to adopt multiple active modes as a function of personal, neighborhood and psychosocial factors. The joint model structures reveal different levels of interdependence among active mobility choices. The strongest positive association is found for walking and cycling adoption, whereas other joint model effects are less evident. Identifying strongly with active mobility, experiences with multimodal travel, possessing better navigational skills, along with supportive local community norms are the factors that appear to drive the joint adoption decisions. This study contributes to the understanding of how decisions within the same functional domain are related.
    Date: 2020–06
  2. By: Genius Murwirapachena; Johane Dikgang
    Abstract: Although stated-preference surveys take various forms, the use of either text or visuals to represent attributes is uncontroversial, and they remain the commonly used formats. While prior research has investigated the impact of these commonly used formats in other disciplines, little is known about their effects on results in terms of relative importance in environmental economics literature. We conduct surveys on households’ preferences for water efficient technologies in South Africa, where we compare three presentation formats, namely text, visuals, and both text and visuals. Survey data collected from 894 heads of households in the Gauteng province is analysed using the mixed logit model to test whether these three formats generate differences in estimated utilities and willingness to pay. This research sheds light on how to develop a valid presentation method for attribute levels in choice experiments, which is critical considering most environmental economics goods and services are not traded in the market. Our results show that the visuals format generates more statistically significant coefficients than the other formats. This suggests that the presentation format has significant impacts on choice. The choice between the three elicitation formats may imply a trade-off in choice precision. Our findings suggest that more research on presentation formats in environmental economics is warranted.
    Keywords: choice experiments, format, text, presentation, visuals
    JEL: C25 C35 C93 Q25 Q51
    Date: 2019–10
  3. By: Regassa, Mekdim D.; Abate, Gashaw T.; Kubik, Zaneta
    Abstract: Increased deployment of agricultural extension agents (EAs) in rural areas is grounded on their importance to spur agricultural productivity and mitigate spatial imbalances in welfare. However, the high turnover and the low motivation levels of EAs in remote areas pose challenges for equitable service provision and, in some cases, exacerbates geographic disparities. We assess the effectiveness of selected potential policy interventions to incentivize and retain EAs in remote areas of Ethiopia. To this end, we conducted a choice experiment to elicit preferences for job attributes of 761 EAs. We applied a random parameters logit model to estimate parameters of interest and to simulate the impact of possible policy interventions. The main results show that offering continuing education opportunities after two years of service increases uptake of an extension job in remote locations by 77 percentage points, which is significantly higher than the effect from doubling current salary levels (70 percentage points). EAs also expressed a strong preference for work environments with basic amenities, housing, transportation services, and wellequipped Farmer Training Centers (FTCs). Furthermore, the results from sub-sample analyses show that female EAs are less responsive to pecuniary incentives and are more concerned with the availability of infrastructure and services. Current salary levels, years of employment, and location of work are also important sources of heterogeneity in the response of EAs to potential policy changes.
    Keywords: ETHIOPIA; EAST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; incentives; work force; public services; rural areas; agricultural extension; agricultural extension agents; time allocation and labor supply; government policy; remoteness
    Date: 2020
  4. By: Harsh Gupta; Mason A. Porter
    Abstract: The study of network formation is pervasive in economics, sociology, and many other fields. In this paper, we model network formation as a ``choice'' that is made by nodes in a network to connect to other nodes. We study these ``choices'' using discrete-choice models, in which an agent chooses between two or more discrete alternatives. One framework for studying network formation is the multinomial logit (MNL) model. We highlight limitations of the MNL model on networks that are constructed from empirical data. We employ the ``repeated choice'' (RC) model to study network formation \cite{TrainRevelt97mixedlogit}. We argue that the RC model overcomes important limitations of the MNL model and is well-suited to study network formation. We also illustrate how to use the RC model to accurately study network formation using both synthetic and real-world networks. Using synthetic networks, we also compare the performance of the MNL model and the RC model; we find that the RC model estimates the data-generation process of our synthetic networks more accurately than the MNL model. We provide examples of qualitatively interesting questions -- the presence of homophily in a teen friendship network and the fact that new patents are more likely to cite older, more cited, and similar patents -- for which the RC model allows us to achieve insights.
    Date: 2020–06
  5. By: Parvaneh Shahnoori (Department of Economics, Payame Noor University, Bandar Abbas, Iran); Glenn P. Jenkins (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University, North Cyprus)
    Abstract: This study estimates the willingness to pay of small and medium-sized enterprises (SMEs) for a business online banking services. The estimation utilizes a contingent valuation method employing data from 400 SMEs in the United Arab Emirates free zones. An interval regression model is used to identify company characteristics affecting WTP. The results indicate an average WTP for online banking of $518.50 per month. Firms engaging in international trade value these services at least 10% more than those with only domestic operations. Other variables that significantly affect WTP include number of employees and the transportation cost of using traditional branch banking.
    Keywords: Contingent Valuation Method, Interval Regression Model, Willingness to Pay, Business Online Banking
    JEL: C13 F10 G21
    Date: 2019
  6. By: Ralph Siebert; Michael J. Seiler
    Abstract: We focus on the housing market and examine why nonlocal home buyers (NLBs) pay 15 percent more for houses than local home buyers (LBs). We estimate a housing demand model that returns heterogeneous willingness to pay parameters for housing attributes. Our results show that NLBs are willing to pay more for specific housing attributes, especially for house size and school quality. We also find that gratification and reward arguments, and imperfect price information explain the price differential to a large extent. Search cost and house age arguments have an adverse effect on NLBs’ house spending.
    Keywords: heterogeneous preferences, housing market, imperfect information on price distributions, school quality, search costs
    JEL: L13 L49 L63
    Date: 2020
  7. By: Stéphan Marette; Anne-Célia Disdier; John C. Beghin
    Abstract: We compare consumers' attitude towards and willingness to pay (WTP) for gene-edited (GE) apples in Europe and the US. Using virtual choices in a lab and different technology messages, we estimate WTP of 162 French and 166 US consumers for new apples, which do not brown upon being sliced or cut. Messages center on (i) the social and private benefits of having the new apples, and (ii) possible technologies leading to this new benefit (conventional hybrids, GE, and genetically modified (GMO)). French consumers do not value the innovation and actually discount it when it is generated via biotechnology. US consumers do value the innovation as long as it is not generated by biotechnology. In both countries, the steepest discount is for GMO apples, followed by GE apples. Furthermore, the discounting occurs through "boycott" consumers who dislike biotechnology. However, the discounting is weaker for US consumers compared to French consumers. Favorable attitudes towards sciences and new technology totally offset the discounting of GE apples.
    Date: 2020–06
  8. By: Iaria, Alessandro; WANG, Ao
    Abstract: We present novel identification and estimation results for a mixed logit model of demand for bundles with endogenous prices given bundle-level market shares. Our approach hinges on an affine relationship between the utilities of single products and of bundles, on an essential real analytic property of the mixed logit model, and on the existence of exogenous cost shifters. We propose a new demand inverse in the presence of complementarity that enables to concentrate out of the likelihood function the (potentially numerous) market-product specific average utilities, substantially alleviating the challenge of dimensionality inherent in estimation. To illustrate the use of our methods, we estimate demand and supply in the US ready-to-eat cereal industry, where the proposed MLE reduces the numerical search from approximately 12000 to 130 parameters. Our estimates suggest that ignoring Hicksian complementarity among different products often purchased in bundles may result in misleading demand estimates and counterfactuals.
    Date: 2020–01
  9. By: David Benson; Matthew A. Masten; Alexander Torgovitsky
    Abstract: We present the ivcrc command, which implements an instrumental variables (IV) estimator for the linear correlated random coefficients (CRC) model. This model is a natural generalization of the standard linear IV model that allows for endogenous, multivalued treatments and unobserved heterogeneity in treatment effects. The proposed estimator uses recent semiparametric identification results that allow for flexible functional forms and permit instruments that may be binary, discrete, or continuous. The command also allows for the estimation of varying coefficients regressions, which are closely related in structure to the proposed IV estimator. We illustrate this IV estimator and the ivcrc command by estimating the returns to education in the National Longitudinal Survey of Young Men.
    Keywords: ivregress; Instrumental variables; Correlated random coefficients; Heterogeneous treatment effects; Varying coefficient models; Returns to schooling
    JEL: C14 C51 I26 C26
    Date: 2020–06–16

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.