nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2020‒10‒12
eight papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. A multinomial and rank-ordered logit model with inter- and intra-individual heteroscedasticity By Anoek Castelein; Dennis Fok; Richard Paap
  2. Valuing Ecosystem Services in the Bang Ka Chao Green Area, Thailand By Petcharat, Areeyapat; Lee, Yohan
  3. Do Recruiters Select Workers with Different Personality Traits for Different Tasks? A Discrete Choice Experiment By Wehner, Caroline; de Grip, Andries; Pfeifer, Harald
  4. Assessing farmer preferences for forest conservation programs in Mato Grosso, Brazil By Kitts, Nolan; Bush, Glenn
  5. Communicating the Benefits of Agrobiodiversity Enhancing Products - Insights from a Discrete Choice Experiment By Lauterbach, Josephine; Risius, Antje; Bantle, Christina
  6. Measuring the non-use value of the Dugong (Dugong dugon) in Thailand By Petcharat, Areeyapat; Lee, Yohan
  7. Entrepreneurial discrete choice: Modelling decisions between self-employment, employer and worker status. Working paper 15. By Bennett, Robert; Montebruno, Piero; Smith, Harry; van Lieshout, Carry
  8. Groundwater level and crop choice: Evidence from a dynamic discrete choice model By Wang, Haoying

  1. By: Anoek Castelein (Erasmus University Rotterdam); Dennis Fok (Erasmus University Rotterdam); Richard Paap (Erasmus University Rotterdam)
    Abstract: The heteroscedastic logit model is useful to describe choices of individuals when the randomness in the choice-making varies over time. For example, during surveys individuals may become fatigued and start responding more randomly to questions as the survey proceeds. Or when completing a ranking amongst multiple alternatives, individuals may be unable to accurately assign middle and bottom ranks. The standard heteroscedastic logit model accommodates such behavior by allowing for changes in the signal-to-noise ratio via a time-varying scale parameter. In the current literature, this time-variation is assumed equal across individuals. Hence, each individual is assumed to become fatigued at the same time, or assumed to be able to accurately assign exactly the same ranks. In most cases, this assumption is too stringent. In this paper, we generalize the heteroscedastic logit model by allowing for differences across individuals. We develop a multinomial and a rank-ordered logit model in which the time-variation in an individual-specific scale parameter follows a Markov process. In case individual differences exist, our models alleviate biases and make more efficient use of data. We validate the models using a Monte Carlo study and illustrate them using data on discrete choice experiments and political preferences. These examples document that inter- and intra-individual heteroscedasticity both exist.
    Keywords: Scale, Heterogeneity, Markov, Logit scaling, Logit mixture, Dynamics, Conjoint, Fatigue, Markov switching
    JEL: C23 C25 C10
    Date: 2020–09–29
  2. By: Petcharat, Areeyapat; Lee, Yohan
    Abstract: Bang Ka Chao, the largest green area in the Bangkok metropolitan area, delivers significant ecosystem services to sustain society free of charge. It is therefore difficult to achieve socially optimal services because of inefficient allocation of resources, over-consumption, and negative externalities resulting from market failures. This study assesses the value, or consumers’ willingness to pay (WTP), for enhanced ecosystem services from the Bang Ka Chao Green Area and to investigate factors influencing the WTP of Bangkok residents. The choice experiment approach was applied by interviewing 200 respondents living in the Bangkok metropolitan area. The data were collected between July and September 2016 and analyzed using a conditional logit model. The results reveal that the respondents are willing to pay USD41.5 per year to improve the ecosystem services provided by the Green Area. The respondents identified air purification as the most important service, while food products and recreational benefits were somewhat important, and bird habitat was the least important. We therefore suggest that the government take immediate steps to establish restoration projects with the concrete objective of enhancing regulating services, especially air purification. Traditional agricultural practices (mixed fruit orchards), agroforestry, and agritourism should also be implemented and promoted in the green area. Therefore, a payment for ecosystem services (PES) scheme funded by Bangkok and recreational users should be a possible approach to guarantee the quality of the ecosystem services provided by the landowners within the Bang Ka Chao Green Area.
    Keywords: Environmental Economics and Policy
    Date: 2020–09–16
  3. By: Wehner, Caroline (BIBB); de Grip, Andries (ROA, Maastricht University); Pfeifer, Harald (BIBB)
    Abstract: This paper explores whether firms recruit workers with different personality traits for different tasks. For our analysis, we used data from a discrete choice experiment conducted among recruiters of 634 firms in Germany. Recruiters were asked to choose between job applicants who differed in seven aspects: professional competence, the 'big five' personality traits and the prospective wage level. We found that all personality traits affect the hiring probability of the job applicant; among them, conscientiousness and agreeableness have the strongest effects. However, recruiters' preferences differed for different job tasks. For analytical tasks, recruiters prefer more open and conscientious applicants, whereas they favour more open, extraverted, and agreeable workers for interactive tasks.
    Keywords: recruitment, personality traits, tasks, discrete choice experiment
    JEL: J23 D91 M51
    Date: 2020–09
  4. By: Kitts, Nolan; Bush, Glenn
    Abstract: The Conserv Project, started by the Amazon Environmental Research Institute (IPAM), aims to establish a novel market-based mechanism in the state of Mato Grosso which incentivizes farmers to conserve land that could otherwise be legally deforested. This study applies a choice experiment (CE) to elicit a farmer’s willingness to accept (WTA) compensation indirectly, by asking respondents to choose between strategically designed alternatives, assuming that people's’ preferences are revealed through the choices they make. CEs have become an increasingly popular method to generate information to support the design of environmental markets. The CE survey was implemented in two distinct and interrelated parts. Part 1 composed of focus group discussion exercises to establish the key attributes of the mechanism which would influence farmer decision and their levels, as well as explore other operational aspects of the program affecting the design of the CE. Phase 2 was the implementation of the CE in the Araguaia Valley utilizing a sample of 40 farmers split between cattle ranchers and soy producers. In conclusion, the choice model estimated provides encouraging results. From the limited sample in this preliminary study, model results clearly show that both livestock and soy farmers are likely to be responsive to a market mechanism as proposed by the Conserv project at least in the short to medium term. However, to get widespread adoption the precise policy mechanisms need to be adapted to the specific conditions of heterogeneous rural farm businesses in the two production classes.
    Keywords: Environmental Economics and Policy
    Date: 2020–09–16
  5. By: Lauterbach, Josephine; Risius, Antje; Bantle, Christina
    Keywords: Marketing, Agribusiness
    Date: 2020–09–18
  6. By: Petcharat, Areeyapat; Lee, Yohan
    Abstract: The dugong is an herbivorous marine mammal species, being vulnerable to extinction throughout its range in the Indo-Pacific region. This paper used the choice experiment method to elicit the non-use value, or the non-users’ willingness to pay (WTP) for conserving the dugongs in Thailand. A face-to-face interview was used to obtain data from 300 residents in five selected districts of Bangkok. The results show that the average WTP for the most preferred dugong conservation scheme (a marker buoy system, recreating habitats, and slowing down the population decline) was 4,382 Thai Baht (USD122) annually per household. Significantly, developing the marker buoy system to identify dugong habitats was the most valued by the general public. However, the respondents were not willing to pay for educating local fishers about the conservation of dugongs. Our results implies that a conservation policy should concentrate on the participation of key fishers in dugong protection projects using incentive measures. We also suggest the government to create protected areas as dugong sanctuaries that consistently support the remaining dugong population.
    Keywords: Environmental Economics and Policy
    Date: 2020–09–16
  7. By: Bennett, Robert; Montebruno, Piero; Smith, Harry; van Lieshout, Carry
    Abstract: This paper estimates an entrepreneurial choice model between different forms of business organisation, focusing on the choice to operate as a sole proprietor operating on own account, or as an employer, rather than as a waged employee. ‘Own account’ was the phrasing used through the censuses of the period we cover: it describes an entrepreneur who operates as self-employed on their own with no employees. A discrete choice decision model is used to estimate probabilities of different choices using the large scale data for England and Wales contained in the ‘British Business Census of Entrepreneurs 1851-1911’ to be deposited at UKDA. This paper uses the data for the later censuses, 1891-1911. This database is one of the outputs of ESRC project ES/M010953 Drivers of Entrepreneurship and Small Businesses’.
    Keywords: Entrepreneurship; Employers; Self-employment; Small businesses; Census
    JEL: D13 D22 L25 L26
    Date: 2019–02
  8. By: Wang, Haoying
    Keywords: Resource/Energy Economics and Policy, Agribusiness, Research Methods/Statistical Methods
    Date: 2020–07

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