nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2022‒04‒04
three papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Value of co-benefits from energy saving ventilation systems—Contingent valuations on Swiss home owners By Nina Boogen; Massimo Filippini; Adan L. Martinez-Cruz
  2. Technology Choice, Externalities in Production, and Chaotic Middle-Income Traps By Takao Asano; Akihisa Shibata; Masanori Yokoo
  3. An SMP-Based Algorithm for Solving the Constrained Utility Maximization Problem via Deep Learning By Kristof Wiedermann

  1. By: Nina Boogen (Center of Economic Research (CER-ETH), ETH Zürich, Zürichbergstrasse 18, 8032 Zürich and Zurich University of Applied Sciences (ZHAW)Switzerland); Massimo Filippini (Center of Economic Research (CER-ETH), ETH Zürich, Zürichbergstrasse 18, 8032 Zürich and Università della Svizzera italiana, 6904 Lugano, Switzerland); Adan L. Martinez-Cruz (Department of Forest Economics, and Centre for Environmental and Resource Economics (CERE), Swedish University of Agricultural Sciences (SLU), Skogsmarksgränd 17 , 90183 Umeå, Sweden)
    Abstract: Previous efforts exploring options to increase residential sector’s energy efficiency have overlooked that highlighting co-benefits associated with energy efficiency may represent a promising strategy to draw attention from decision makers. For instance, in addition to savings in energy costs, buildings equipped with energy saving and comfort ventilation (ESV) system provide co-benefits such as improved indoor air quality (IAQ), thermal comfort, and noise reduction. These co-benefits are attributes of an experience goods as their value is difficult to appraise unless they have been experienced. This paper estimates the value of these co-benefits by inquiring willingness to accept (WTA) compensation to hold off on using ESV from Swiss owners of Minergie houses, which are equipped with ESV. Average monthly WTA is CHF 181 —value dominated by IAQ. WTA protocols may deliver overestimated values. Thus this paper estimates willingness to pay (WTP) on a sample of owners of conventional houses —i.e. respondents that have not experienced an ESV. Average monthly WTP is CHF 163 —value dominated by presence of allergies at home, an approximation to relevance of IAQ among respondents that have not experienced ESV. A back-of-the-envelope cost-benefit analysis informed with our estimates suggests that monthly benefits from ESV can be as much as twice the costs.
    Keywords: Co-benefits of energy efficiency; residential investment decisions; willingness to accept; willingness to pay; Swiss home owners
    JEL: D12 Q40 R21
    Date: 2022–03
  2. By: Takao Asano (Okayama University); Akihisa Shibata (Kyoto University); Masanori Yokoo (Okayama University)
    Abstract: We incorporate external effects of capital on production and endogenous technology choice into the standard overlapping generations model. We demonstrate that our model can exhibit poverty traps, middle-income traps, and perpetual growth paths. We also show that these three phenomena coexist for some set of parameters and the economy caught in the middle-income trap can exhibit chaotic fluctuations in the long run. In obtaining these results in the standard overlapping generations model, the combination of technology choice and externalities in production plays a crucial role.
    Keywords: External effect; Technology choice; Overlapping generations model, Middle-income trap; Chaos
    Date: 2022–03
  3. By: Kristof Wiedermann
    Abstract: We consider the utility maximization problem under convex constraints with regard to theoretical results which allow the formulation of algorithmic solvers which make use of deep learning techniques. In particular for the case of random coefficients, we prove a stochastic maximum principle (SMP), which also holds for utility functions $U$ with $\mathrm{id}_{\mathbb{R}^{+}} \cdot U'$ being not necessarily nonincreasing, like the power utility functions, thereby generalizing the SMP proved by Li and Zheng (2018). We use this SMP together with the strong duality property for defining a new algorithm, which we call deep primal SMP algorithm. Numerical examples illustrate the effectiveness of the proposed algorithm - in particular for higher-dimensional problems and problems with random coefficients, which are either path dependent or satisfy their own SDEs. Moreover, our numerical experiments for constrained problems show that the novel deep primal SMP algorithm overcomes the deep SMP algorithm's (see Davey and Zheng (2021)) weakness of erroneously producing the value of the corresponding unconstrained problem. Furthermore, in contrast to the deep controlled 2BSDE algorithm from Davey and Zheng (2021), this algorithm is also applicable to problems with path dependent coefficients. As the deep primal SMP algorithm even yields the most accurate results in many of our studied problems, we can highly recommend its usage. Moreover, we propose a learning procedure based on epochs which improved the results of our algorithm even further. Implementing a semi-recurrent network architecture for the control process turned out to be also a valuable advancement.
    Date: 2022–02

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