nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2021‒08‒23
nine papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Unobserved Heterogeneity, State Dependence, and Health Plan Choices By Ariel Pakes; Jack R. Porter; Mark Shepard; Sophie Calder-Wang
  2. Identification of Incomplete Preferences By Arie Beresteanu
  3. The Damages and Distortions from Discrimination in the Rental Housing Market By Peter Christensen; Christopher Timmins
  4. Choice by Rejection By Bhavook Bhardwaj; Kriti Manocha
  5. Attention Please! Health Plan Choice and (In-)Attention By Tamara Bischof; Michael Gerfin; Tobias Mueller
  6. Place-Based Redistribution in Location Choice Models By Morris Davis; Jesse M. Gregory
  7. MobilityCoins -- A new currency for the multimodal urban transportation system By Klaus Bogenberger; Philipp Blum; Florian Dandl; Lisa-Sophie Hamm; Allister Loder; Patrick Malcom; Martin Margreiter; Natalie Sautter
  8. Experimentally Validating Welfare Evaluation of School Vouchers: Part I By Peter Arcidiacono; Karthik Muralidharan; Eun-young Shim; John D. Singleton
  9. Quantifying the intangible impact of the Olympics using subjective well-being data By Dolan, Paul; Kavetsos, Georgios; Krekel, Christian; Mavridis, Dimitris; Metcalfe, Robert; Senik, Claudia; Szymanski, Stefan; Ziebarth, Nicolas R.

  1. By: Ariel Pakes; Jack R. Porter; Mark Shepard; Sophie Calder-Wang
    Abstract: We provide a new method to analyze discrete choice models with state dependence and individual-by-product fixed effects and use it to analyze consumer choices in a policy-relevant environment (a subsidized health insurance exchange). Moment inequalities are used to infer state dependence from consumers’ switching choices in response to changes in product attributes. We infer much smaller switching costs on the health insurance exchange than is inferred from standard logit and/or random effects methods. A counterfactual policy evaluation illustrates that the policy implications of this difference can be substantive.
    JEL: C13 D12 I11 L60 M31
    Date: 2021–07
  2. By: Arie Beresteanu
    Abstract: We provide a sharp identification region for discrete choice models in which consumers' preferences are not necessarily complete and only aggregate choice data is available to the analysts. Behavior with non complete preferences is modeled using an upper and a lower utility for each alternative so that non-comparability can arise. The identification region places intuitive bounds on the probability distribution of upper and lower utilities. We show that the existence of an instrumental variable can be used to reject the hypothesis that all consumers' preferences are complete, while attention sets can be used to rule out the hypothesis that all individuals cannot compare any two alternatives. We apply our methods to data from the 2018 mid-term elections in Ohio.
    Date: 2021–01
  3. By: Peter Christensen; Christopher Timmins
    Abstract: By constraining an individual’s choice during a search, housing discrimination dis- torts sorting decisions away from true preferences and results in a ceteris paribus reduction in welfare. This study combines a large-scale field experiment with a residential sorting model to derive utility-theoretic measures of renter welfare loss associated with the constraints imposed by discrimination in the rental housing market. Results from experiments conducted in five cities show that key neighbor- hood amenities are associated with higher levels of discrimination. Results from the structural model indicate that discrimination imposes costs equivalent to 4.7% of annual income for renters of color, and that search behavior results in greater welfare costs for African Americans as their incomes rise. Renters of color must make substantial investments in additional search to mitigate the costs of these constraints. We find that a naive model ignoring discrimination constraints yields significantly biased estimates of willingness to pay.
    JEL: Q51 Q53 R31
    Date: 2021–07
  4. By: Bhavook Bhardwaj; Kriti Manocha
    Abstract: We propose a boundedly rational model of choice where agents eliminate dominated alternatives using a transitive rationale before making a choice using a complete rationale. This model is related to the seminal two-stage model of Manzini and Mariotti (2007), the Rational Shortlist Method (RSM). We analyze the model through reversals in choice and provide its behavioral characterization. The procedure satisfies a weaker version of the Weak Axiom of Revealed Preference (WARP) allowing for at most two reversals in choice in terms of set inclusion for any pair of alternatives. We show that the underlying rationales can be identified from the observable reversals in the choice. We also characterize a variant of this model in which both the rationales are transitive
    Date: 2021–08
  5. By: Tamara Bischof; Michael Gerfin; Tobias Mueller
    Abstract: We study the role of inattention as a key source of inertia in health plan choices. Our structural model shows that more than 90% of the elderly in Switzerland are inattentive and thus stick to their previous plan. We estimate sizeable switching costs even conditional on attention explaining part of the observed choice persistence. Inattention leads to overspending and generates considerable welfare losses for most consumers. A policy simulation shows that eliminating financially dominated plans from the choice set yields welfare gains for two thirds of individuals.
    Keywords: health plan choice, inertia, attention, switching costs, managed competition, elderly
    JEL: D12 G22 I13 D90 J14
    Date: 2021–08
  6. By: Morris Davis; Jesse M. Gregory
    Abstract: In many recent location choice models, households randomly vary with respect to their utility of living in a location. We demonstrate that the distribution generating this randomness is fundamentally not identifiable from location choice data and as a result the optimal allocation as chosen by a social planner is not identified. We propose an algorithm for setting the distribution generating the random utility across locations that implies a planner will optimally choose no redistribution in the absence of externalities or equity motives between different groups of people. Our algorithm preserves a planner's motives to redistribute due to equity considerations between different types of people and efficiency in production, the focus of many recent studies.
    JEL: H0 R38
    Date: 2021–07
  7. By: Klaus Bogenberger; Philipp Blum; Florian Dandl; Lisa-Sophie Hamm; Allister Loder; Patrick Malcom; Martin Margreiter; Natalie Sautter
    Abstract: The MobilityCoin is a new, all-encompassing currency for the management of the multimodal urban transportation system. MobilityCoins includes and replaces various existing transport policy instruments while also incentivizing a shift to more sustainable modes as well as empowering the public to vote for infrastructure measures.
    Date: 2021–07
  8. By: Peter Arcidiacono; Karthik Muralidharan; Eun-young Shim; John D. Singleton
    Abstract: In this paper, we use a unique two-stage experiment that randomized access to school vouchers across both markets and students in rural India to estimate the revealed preference value of school choice. In the first step of the research design, we develop an empirical model of school choice subject to liquidity and credit constraints that is estimated using data from only the control markets. Based on this exercise, we estimate that the voucher generated welfare gains exceeding four times the average private school's annual tuition on average to the students induced into private schooling. The second step of the research design will validate the estimated welfare impacts by comparing model predictions for a simulated voucher program in control markets with the data from the treatment group. The results in this paper are based on the first step (using only control data) and this draft serves as a pre-commitment to the model estimates and predictions before examining the experimental data.
    JEL: D12 H42 I21 I28 O15
    Date: 2021–07
  9. By: Dolan, Paul; Kavetsos, Georgios; Krekel, Christian; Mavridis, Dimitris; Metcalfe, Robert; Senik, Claudia; Szymanski, Stefan; Ziebarth, Nicolas R.
    Abstract: Hosting the Olympic Games costs billions of taxpayer dollars. Following a quasi-experimental setting, this paper assesses the intangible impact of the London 2012 Olympics, using a novel panel of 26,000 residents in London, Paris, and Berlin during the summers of 2011, 2012, and 2013. We show that hosting the Olympics increases subjective well-being of the host city's residents during the event, particularly around the times of the opening and closing ceremonies. However, we do not find much evidence for legacy effects. Estimating residents' implicit willingness-to-pay for the event, we do not find that it was worth it for London alone, but a modest well-being impact on the rest of the country would make hosting worth the costs.
    Keywords: Subjective well-being; Life satisfaction; Happiness; Intangible effects; Olympic Games; Sport events; Quasi-natural experiment
    JEL: I30 I31 I38 L83
    Date: 2019–09–01

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