nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2021‒06‒28
eight papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Distribution of the benefits of regulation vs. competition: The case of mobile telephony in South Africa By Ryan Hawthorne; Lukasz Grzybowski
  2. Danger, Respect, and Indifference: Bike-Sharing Choices in Shanghai and Tokyo using Latent Choice Models By Yoo, Sunbin; Hong, Sungwan; Park, Yeongkyung; Okuyama, Akihiro; Zhang, Zhaozhe; Yoshida, Yoshikuni; Managi, Shunsuke
  3. Long-distance mode choice model estimation using mobile phone network data By Andersson, Angelica; Engelson, Leonid; Börjesson, Maria; Daly, Andrew; Kristoffersson, Ida
  4. Loss Aversion in Taste-Based Employee Discrimination: Evidence from a Choice Experiment By Lippens, Louis; Baert, Stijn; Derous, Eva
  5. What’s the Bleeding Problem? Period Poverty, Information Failure and Consumer Preferences in the Global South By Supriya Garikipati; Penelope A. Phillips-Howard
  6. Modelling sector-specific employment shocks with EUROLAB, a multidimensional behavioural model By NARAZANI Edlira; COLOMBINO Ugo
  7. The value of travel speed By Cornelis Dirk van Goeverden
  8. Politicians' Willingness to Agree: Evidence from the interactions in Twitter of Chilean Deputies By Pablo Henr\'iquez; Jorge Sabat; Jos\'e Patr\`icio Sullivan

  1. By: Ryan Hawthorne (University of Cape Town); Lukasz Grzybowski (SES - Département Sciences Economiques et Sociales - Télécom ParisTech, ECOGE - Economie Gestion - I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, IP Paris - Institut Polytechnique de Paris)
    Abstract: We test for the distributional effects of regulation and entry in the mobile telecommunications sector in a highly unequal country, South Africa. Using six waves of a consumer survey of over 134,000 individuals between 2009-2014, we estimate a discrete choice model allowing for individual-specific price-responsiveness and preferences for network operators. Next, we use a demand and supply equilibrium framework to simulate prices and the distribution of welfare without entry and mobile termination rate regulation. We find that, in the South African context, regulation benefits consumers significantly more than entry does, and that high-income consumers and city-dwellers benefit more in terms of increased consumer surplus.
    Keywords: Mobile telecommunications,Regulation,Entry,Termination rates,Discrete choice JEL Classification: L13,L40,L50,L96
    Date: 2021–01
  2. By: Yoo, Sunbin; Hong, Sungwan; Park, Yeongkyung; Okuyama, Akihiro; Zhang, Zhaozhe; Yoshida, Yoshikuni; Managi, Shunsuke
    Abstract: While various policy instruments have attempted to raise environmental concerns in the past decades, it is unclear if these concerns are revealed in the consumer choices of our daily life. In this study, we investigate whether environmental concerns drive the choices of modes of transport through the bike-sharing example in Tokyo and Shanghai. We conducted a survey questionnaire to define three types of environmental concerns and quantitatively estimated their effects on bike-sharing choices using the latent class model, considering individual heterogeneity. The results show that environmental concerns affect bike-sharing choices differently for different people. While the fear of natural disasters and/or an indifference towards the environment would be dominant factors in commuting, the willingness to preserve a natural environment shows substantial correlations to bike-sharing when respondents return from weekend shopping. These differences indicate that relevant policies should be effectively implemented to interact with such environmental concerns.
    Keywords: Bike-sharing; shared transportation; demand estimation; latent choice model; latent class; environmental concern
    JEL: L62 Q5 Q55 R4
    Date: 2021–06–16
  3. By: Andersson, Angelica (Research Programme in Transport Economics); Engelson, Leonid (Research Programme in Transport Economics); Börjesson, Maria (Research Programme in Transport Economics); Daly, Andrew (Research Programme in Transport Economics); Kristoffersson, Ida (Research Programme in Transport Economics)
    Abstract: In this paper we develop two methods for the use of mobile phone data to support the estimation of long-distance mode choice models. Both methods are based on logit formulations in which we define likelihood functions and use maximum likelihood estimation. Mobile phone data consists of information about a sequence of antennae that have detected each phone, so the mode choice is not actually observed. In the first trip-based method, the mode of each trip is inferred by a separate procedure, and the estimation process is then straightforward. However, since it is usually not possible to determine the mode choice with certainty, this method might give biased results. In our second antenna-based method we therefore base the likelihood function on the sequences of antennae that have detected the phones. The estimation aims at finding a parameter vector in the mode choice model that would explain the observed sequences best. The main challenge with the antenna-based method is the need for detailed resolution of the available data, i.e., that the mobile phone operator might not be willing or able to provide the modeller with sequences of antennae that have detected the phones. In this paper we show the derivation of the two methods, that they coincide in case of certainty about the chosen mode and discuss the validity of assumptions and their advantages and disadvantages. Furthermore, we apply the first trip-based method to empirical data and compare the results of two different ways of implementing it.
    Keywords: Demand model; Mode choice; Mobile phone network data; Travel behaviour; Long-distance travel
    JEL: C18 C35 R41 R42
    Date: 2021–06–16
  4. By: Lippens, Louis (Ghent University); Baert, Stijn (Ghent University); Derous, Eva (Ghent University)
    Abstract: Using a choice experiment, we test whether taste-based employee discrimination against ethnic minorities is susceptible to loss aversion. In line with empirical evidence from previous research, our results indicate that introducing a hypothetical wage penalty for discriminatory choice behaviour lowers discrimination and that higher penalties have a greater effect. Most notably, we find that the propensity to discriminate is significantly lower when this penalty is loss-framed rather than gain-framed. From a policy perspective, it could therefore be more effective to financially penalise taste-based discriminators than to incentivise them not to discriminate.
    Keywords: taste-based discrimination, employee discrimination, loss aversion, ethnicity
    JEL: J70 J24 J60 C92
    Date: 2021–06
  5. By: Supriya Garikipati; Penelope A. Phillips-Howard
    Abstract: A combination of commercial interests, cultural constraints and illiteracy have shaped the period product markets in the Global South such that disposable pads have gained in popularity but relatively little is known about reusable innovations that could support the goal of eradicating period poverty sustainably and equitably. This work examines how asymmetric information in this market affects consumer choices by drawing on a field experiment and survey with 277 women from low-income households in India. Through a careful consideration of the cultural context and policy backdrop in which decisions on menstrual products and practices are made we draw two key conclusions. First, we find that consumers are effectually denied all agency over choice of period product and are forced to select disposable pads, frequently at aberrant consequences for themselves and their environments. Such ‘perverse selection’ is manifested as a relational bond with disposables grounded in emotional and habitual cues. This poses a serious challenge to the introduction of reusables. Second, we demonstrate that ‘informed choice’ is a viable policy tool with potential to steer the menstrual product market in a beneficial direction both for costs to consumers and to their environmental eco-systems.
    Keywords: period poverty, menstrual hygiene, information failure, relationship theory, informed choice
  6. By: NARAZANI Edlira (European Commission - JRC); COLOMBINO Ugo
    Abstract: Little is known yet about the impact of the COVID crisis on household income and jobs in absence of real time information on these variables. A recent literature strand has sought to overcome data limitations to assess the distributional impact of policy measures taken in the EU using various empirical approaches. However, despite the importance of behavioural effects, transitions from work to unemployment or inactivity (or vice versa) are considered exogenously in this literature. This paper explains how EUROLAB, a multidimensional discrete choice labour supply model, can be used to take account of behavioural effects in the face of exogenous demand shocks. We show that it is possible to account for behavioural effects endogenously using a procedure permitting a consistent introduction of sectoral demand shocks and the assessment of COVID-19 related reforms under equilibrium conditions. We illustrate the use of our model considering the case of a simplified wage subsidy scheme using Italian SILC. Our empirical results support the theoretical model, showing in particular how sectoral demand shocks lower wages, employment and increase unemployment under equilibrium conditions. Furthermore, the results show that the labour market reacts differently to the introduction of the wage subsidy scheme, depending on whether the wage subsidy is allocated to potential beneficiaries before or after labour market equilibrium is achieved. In the short-run, a wage subsidy helps to preserve jobs. From a longer-term perspective, it should contribute to the recovery of the labour market although the return to pre-shock employment level depends on a number of factors related to the subsidy (such as duration and amount) and the potential of the labour market to create new jobs.
    Keywords: Labour supply, Labour market equilibrium, Short-time work schemes, Covid-19
    Date: 2021–06
  7. By: Cornelis Dirk van Goeverden
    Abstract: Travel speed is an intrinsic feature of transport, and enlarging the speed is considered as beneficial. The benefit of a speed increase is generally assessed as the value of the saved travel time. However, this approach conflicts with the observation that time spent on travelling is rather constant and might not be affected by speed changes. The paper aims to define the benefits of a speed increase and addresses two research questions. First, how will a speed increase in person transport work out, which factors are affected? Second, is the value of time a good proxy for the value of speed? Based on studies on time spending and research on the association between speed and land use, we argue that human wealth could be the main affected factor by speed changes, rather than time or access. Then the value of time is not a good proxy for the value of speed: the benefits of a wealth increase are negatively correlated with prosperity following the law of diminishing marginal utility, while the calculated benefits of saved travel time prove to be positively correlated. The inadequacy of the value of time is explained by some shortcomings with respect to the willingness to pay that is generally used for assessing the value of time: people do not predict correctly the personal benefits that will be gained from a decision, and they neglect the social impacts.
    Date: 2021–06
  8. By: Pablo Henr\'iquez; Jorge Sabat; Jos\'e Patr\`icio Sullivan
    Abstract: Measuring the number of "likes" in Twitter and the number of bills voted in favor by the members of the Chilean Chambers of Deputies. We empirically study how signals of agreement in Twitter translates into cross-cutting voting during a high political polarization period of time. Our empirical analysis is guided by a spatial voting model that can help us to understand Twitter as a market of signals. Our model, which is standard for the public choice literature, introduces authenticity, an intrinsic factor that distort politicians' willigness to agree (Trilling, 2009). As our main contribution, we document empirical evidence that "likes" between opponents are positively related to the number of bills voted by the same pair of politicians in Congress, even when we control by politicians' time-invariant characteristics, coalition affiliation and following links in Twitter. Our results shed light into several contingent topics, such as polarization and disagreement within the public sphere.
    Date: 2021–06

This nep-dcm issue is ©2021 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.