nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2022‒01‒03
six papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Preferences and Equivalent Income in the UK By An Thu
  2. Accounting for subsistence needs in non-market valuation: A simple proposal By Victor Champonnois; Olivier Chanel
  3. Model-Rich Approaches to Eliciting Weak Preferences: Evidence from a Multi-Valued Choice Experiment By Georgios Gerasimou
  4. Policy Choice with Multiple Policies and Goals By Martin, Will
  5. Identification Of Mixtures Of Dynamic Discrete Choices By Higgins, Ayden; Jochmans, Koen
  6. Measuring preferences for competition with experimentally-validated survey questions By Francesco Fallucchi; Daniele Nosenzo; Ernesto Reuben

  1. By: An Thu (Department of Economics, University of Sheffield, UK)
    Abstract: The use of multidimensional wellbeing has emerged from a shift of the main focus of policies from income to the consideration of other non-income dimensions. Using the ordered logit fixed effects modelling technique in a life satisfaction regression to estimate coefficients related to income and non-income life domains, the study has examined the computation of a preference- based single index measure of wellbeing called equivalent income. It is noted that one contribution from this study is that the analysis takes into account hedonic adaptation when computing of equivalent income. This aspect is new in the literature and none of the previous studies included adaptation in the estimation of equivalent income. The coefficients related to income and non-income life domains estimated from the life sat- isfaction regressions are used to calculate equivalent income at the individual level. The results confirm low degree of overlap between individuals with the lowest equivalent income and those worst-off identified by equivalised income and by life satisfaction. The estimated willingness to pay (WTP) for perfect health accounts for a large proportion of equivalised income, while WTP for being employed is quite low. In addition, the findings conclude that across wellbeing measures, women aged 40-50 with lower education, living with other people in an urban area, childless and do not own a home out- right are often identified as the worst-off. Regarding adaptation, the results confirm no adaptation to impairment after more than three years since onset.
    Keywords: Equivalent income, willingness-to-pay, subjective wellbeing, life satisfaction
    JEL: D63 I3 I31
    Date: 2021–11
  2. By: Victor Champonnois (UMR G-EAU - Gestion de l'Eau, Acteurs, Usages - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - AgroParisTech - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Olivier Chanel (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Revealed and stated preference techniques are widely used to assess willingness to pay (WTP) for non-market goods as input to public and private decision-making. However, individuals first have to satisfy subsistence needs through market good consumption, which affects their ability to pay. We provide a methodological framework and derive a simple ex post adjustment factor to account for this effect. We quantify its impacts on the WTP for non-market goods and the ranking of projects theoretically, numerically and empirically. This confirms that non-adjusted WTP tends to be plutocratic: the views of the richest-whatever they are-are more likely to impact decision-making, potentially leading to ranking reversal between projects. We also suggest that the subsistence needs-based adjustment factor we propose has a role to play in value transfer procedures. The overall goal is a better representation of the entire population's preferences with regard to non-market goods.
    Keywords: subsistence needs,adjustment factor,non-market valuation,value transfer,population's preferences
    Date: 2021–11–03
  3. By: Georgios Gerasimou
    Abstract: This paper contributes to the elicitation of a decision maker's strict preferences and their possible indifference or incomparability/indecisiveness. Every subject in both treatments of an incentivized lab experiment could choose multiple alternatives from each of the 50 distinct menus of popular gift-card pairs that they saw. Subjects in the non-forced-choice treatment could, in addition, avoid/delay making an active choice at those menus. Applying a non-parametric optimization method on data collected from 273 subjects, we find that nearly 60% of them are well-approximated by an indifference-permitting model of complete- or incomplete-preference maximization. Most recovered preferences are unique, have a non-trivial indifference part and, where relevant, a distinct indecisiveness part. The two kinds of distinctions between indifference and indecisiveness uncovered by this method are theory-guided and documented empirically for the first time. These findings suggest that accounting for possible indifferences and/or incomparabilities in the data-collection process and analysis can be useful in eliciting transitive weak preferences. Two aspects of the experimental design, finally, allow for interpreting an additional 10% of subjects as revealing a systematic preference for randomization or satisficing.
    Date: 2021–11
  4. By: Martin, Will
    Keywords: Agricultural and Food Policy
    Date: 2021–08
  5. By: Higgins, Ayden; Jochmans, Koen
    Abstract: This paper provides new identification results for finite mixtures of Markov processes. Our arguments are constructive and show that identification can be achieved from knowledge of the cross-sectional distribution of three (or more) effective time-series observations under simple conditions. Our approach is contrasted with the ones taken in prior work by Kasahara and Shimotsu (2009) and Hu and Shum (2012). Most notably, monotonicity restrictions that link conditional distributions to latent types are not needed. Maximum likelihood is considered for the purpose of estimation and inference. Implementation via the EM algorithm is straightforward. Its performance is evaluated in a simulation exercise.
    Keywords: Discrete choice; heterogeneity; Markov process; mixture; state dependence
    JEL: C14 C23 C51
    Date: 2021–11–30
  6. By: Francesco Fallucchi; Daniele Nosenzo; Ernesto Reuben
    Abstract: We validate experimentally a new survey item to measure the preference for competition.The item, which measures participants’ agreement with the statement “Competition brings the best out of me”, predicts individuals’ willingness to compete in the laboratory after controlling for their ability, beliefs, and risk attitude (Niederle and Vesterlund, 2007). We further validate the explanatory power of our survey item outside of the laboratory, by comparing responses across two samples with predicted differences in their preference for competition: professional athletes and non-athletes. As predicted, we find that athletes score higher on the item than non-athletes.
    Keywords: competition; survey question; experiment validation
    JEL: D90 D91
    Date: 2021–12

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