nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2021‒07‒12
nine papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Willingness to pay for COVID-19 environmental health risk reductions in consumption: Evidence from U.S. professional sports By Brad R. Humphreys; Gary A. Wagner; John C. Whitehead; Pamela Wicker
  2. Estimating Consumer Inertia in Repeated Choices of Smartphones* By Lukasz Grzybowski; Ambre Nicolle
  3. How much do we actually care? A study on consumer preference heterogeneity and WTP for farm animal health and welfare in the UK By Rodrigues, Maria; Hanley, Nicholas
  4. Predicting choice-averse and choice-loving behaviors in a field experiment with actual shoppers By Ong, David
  5. Reference Dependence and Random Attention By Matthew Kovach; Elchin Suleymanov
  6. Do preferences for urban amenities really differ by skill? By Arntz, Melanie; Brüll, Eduard; Lipowski, Cäcilia
  7. Modelling sector-specific employment shocks with EUROLAB, a multidimensional behavioural model By NARAZANI Edlira; COLOMBINO Ugo
  8. Consideration of Automated Vehicle Benefits and Research Needs for Rural America By Dowds, Jonathan; Sullivan, James; Rowangould, Gregory; Aultman-Hall, Lisa
  9. The Social Value of a SARS-CoV-2 Vaccine: Willingness to Pay Estimates from Four Western Countries By Costa-Font, Joan; Rudisill, Caroline; Harrison, Sayward; Salmasi, Luca

  1. By: Brad R. Humphreys; Gary A. Wagner; John C. Whitehead; Pamela Wicker
    Abstract: The COVID-19 pandemic caused substantial economic changes. The airborne transmission of the coronavirus increased the environmental health risks associated with many activities that entailed little risk in the pre-pandemic period, including workplace risks and risks faced by consumers. While a large literature estimates local tradeoffs between money and reduced risk of negative health outcomes in many settings, little empirical evidence addresses consumer willingness to pay for reduction in environmental health risks associated with coronavirus transmission. We estimate professional sports fans’ willingness to pay (WTP) for reduced likelihood of coronavirus infection through mask and social distancing policies at games using a stated preference approach. Regression results based on a latent class logit model using survey data collected from 1,391 fans of professional sports teams in five large U.S. metropolitan areas indicate increased attendance likelihood if the venue requires masks and limits attendance to below capacity. Latent class logit models indicate significant heterogeneity in WTP across risk scenarios and sports. We characterize the types of professional sports fan as casual fans who prefer a mask requirement but are indifferent to stadium and arena capacity, rabid fans who are anti-maskers and indifferent to capacity and fans who only have a positive WTP when there is a mask requirement and low stadium/arena capacity (i.e., opportunities for the greatest amount of social distancing). Key Words: Discrete choice experiment; Stated preferences; Willingness-to-pay; Environmental health risk
    Date: 2021
  2. By: 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 - CNRS - Centre National de la Recherche Scientifique - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres, IP Paris - Institut Polytechnique de Paris); Ambre Nicolle (ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz])
    Abstract: For a sample of 9,799 subscribers to a single mobile operator, we observe switching between mobile handsets between July 2011 and December 2014. We estimate a discrete choice model in which we account for disutility from switching to different operating systems and brands. Our estimation results indicate the presence of significant inertia in the choice of operating systems and brands. We use our model to simulate market shares in the absence of switching costs and conclude that the market shares of Android and smaller operating systems would increase at the expense of the market share of iOS in such context.
    Keywords: Android,iOS,Mixed Logit,Switching Costs,Consumer Inertia,Smartphones
    Date: 2021
  3. By: Rodrigues, Maria; Hanley, Nicholas
    Abstract: Do consumers care about the health of farm animals? We assess the relationship between consumer preferences (N=515), herd sickness levels and farm animal health and welfare (FAHW) by analysing UK consumers purchasing decisions, in the context of two endemic livestock conditions Bovine Viral Diarrhoea (BVD) in cattle and lameness in sheep. The analysis uses discrete choice experiments related to four products: beef and milk, and lamb and wool. Our study provides robust evidence that UK consumers care about farm animal health and welfare independently of the sickness level in the herd/flock, when sickness levels do not compromise the safety of the products consumed.
    Keywords: Food Consumption/Nutrition/Food Safety, Consumer/Household Economics
    Date: 2021–03
  4. By: Ong, David
    Abstract: A large body of chiefly laboratory research has attempted to demonstrate that people can exhibit choice-averse behavior from cognitive overload when faced with many options. However, meta-analyses of these studies, which are generally of one or two product lines, reveal conflicting results. Findings of choice-averse behavior are balanced by findings of choice-loving behavior. Unexplored is the possibility that many consumers may purchase to reveal their tastes for unfamiliar products, rather than attempt to forecast their tastes before purchase. I model such ‘sampling-search’ behavior and predict that the purchases of unfamiliar consumers increase with the available number of varieties for popular/mainstream product lines and decrease for niche product lines. To test these predictions, I develop a measure of popularity based on a survey of 1,440 shoppers for their preferences over 24 product lines with 339 varieties at a large supermarket in China. 35,694 shoppers were video recorded after the varieties they faced on shelves were randomly reduced. As found in the meta-studies, choice-averse behavior was balanced by choice-loving behavior. However, as predicted, the probability of choice-loving behavior increases with the number of available varieties for popular product lines, whereas choice-averse behavior increases with available varieties for niche product lines. These findings suggest that increasing the number of varieties has predictable opposing effects on sales, depending upon the popularity of the product line, and opens the possibility of reconciling apparently conflicting prior results.
    Keywords: field experiment, choice overload, choice-aversion, consumer search
    JEL: C93 D83 M31
    Date: 2021–06–21
  5. By: Matthew Kovach; Elchin Suleymanov
    Abstract: We explore the ways that a reference point may direct attention. Utilizing a stochastic choice framework, we provide behavioral foundations for the Reference- Dependent Random Attention Model (RD-RAM). Our characterization result shows that preferences may be uniquely identified even when the attention process depends arbitrarily on both the menu and the reference point. The RD-RAM is able to capture rich behavioral patterns, including frequency reversals among non-status quo alternatives and choice overload. We also analyze specific attention processes, characterizing reference-dependent versions of several prominent models of stochastic consideration.
    Date: 2021–06
  6. By: Arntz, Melanie; Brüll, Eduard; Lipowski, Cäcilia
    Abstract: City-level policies often aim at attracting skilled workers by improving urban amenities. However, due to endogeneity problems, studies relying on revealed preferences have difficulties in providing evidence for the basic premise that skilled workers place a higher value on urban amenities than less skilled individuals. Therefore, we use a stated- preference experiment to directly examine preferences for urban amenities. In a custom survey, we elicit hypothetical job choices between two cities that differ in wages and a set of urban amenities. We find that amenities are important determinants of city choice, with respondents willing to forgo a significant fraction of their wage to live in a city with better amenities. Most strikingly, we do not find any preference heterogeneity between workers differing by education or creative class membership. Instead, we uncover large heterogeneities mainly along family-related mobility constraints and unobserved dimensions. Our results imply that there is not much scope for amenity-oriented policies to improve the local skill mix. Rather, the urban skill bias reflects the incapability of less skilled individuals to afford living in and moving to their preferred places, resulting in significant welfare losses.
    Keywords: Urban amenities,regional policy,internal migration,skill selective migration
    JEL: R12 R22 R58
    Date: 2021
  7. 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
  8. By: Dowds, Jonathan; Sullivan, James; Rowangould, Gregory; Aultman-Hall, Lisa
    Abstract: Safety, mobility, accessibility challenges, and dependence on personal vehicles have long plagued rural transportation systems. Benefits in these areas are widely touted by autonomous vehicle (AV) advocates. Seven mechanisms for AV-induced increases in vehicle miles traveled (VMT) are reviewed here, and five of these mechanisms are expected to have a disproportionately larger impact on rural VMT. There is an almost uniform expectation that AV-related VMT increases must be managed through car-sharing and ride-sharing systems. The landscape of origins and destinations and the total population of rural areas preclude reasonable sharing, and there is a risk of unintended consequences from pro-sharing policies that will limit rural AV adoption or increase unit costs leading to a failure to attain safety and mobility benefits. Designing policies for optimal AV deployment in rural areas requires modeling. This paper outlines five methods that have been used to study VMT changes: travel demand equalization; travel demand elasticity; travel demand models; and stated and revealed preference surveys. The first three suffer from a lack of rural-specific data. Revealed preference surveys are very expensive but may be worthwhile given the scope of the potential benefits to a large portion of the country and nearly 20% of its residents. Alternatively, the more cost-effective, albeit biased, stated preference survey might fill the rural AV data gap. Rural data are essential to inform policy design because rural areas will experience different AV benefits and impacts than are seen in urban areas. View the NCST Project Webpage
    Keywords: Engineering, Social and Behavioral Sciences, Autonomous vehicles, rural travel, vehicle miles travel, induced demand
    Date: 2021–07–01
  9. By: Costa-Font, Joan (London School of Economics); Rudisill, Caroline (University of South Carolina); Harrison, Sayward (University of South Carolina); Salmasi, Luca (Catholic University - Rome)
    Abstract: SARS-CoV-2 vaccines give rise to positive externalities on population health, society and the economy in addition to protecting the health of vaccinated individuals. Hence, the social value of such a vaccine exceeds its market value. This paper estimates the willingness to pay (WTP) for a hypothetical SARS-CoV-2 vaccine in four countries, namely the United States (US), the United Kingdom (UK), Spain and Italy during the first wave of the COVID-19 pandemic when no specific vaccine had been approved nor subsidised. WTP estimates are elicited using a payment card method to avoid 'yea saying' biases, and we study the effect of protest responses, sample selection bias, as well as the influence of trust in government and risk exposure when estimating the WTP. Our estimates suggest evidence of an average value of a hypothetical vaccine of 100-200 US dollars once adjusted by purchasing power parity (PPP). Estimates are robust to a number of checks.
    Keywords: social value, willingness to pay, vaccine value, vaccine attitudes, payment card, sample selection, protest responses, positive externalities, COVID-19
    JEL: H23 H42 I18
    Date: 2021–06

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