nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2022‒09‒26
six papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Identifying State Dependence in Brand Choice: Evidence from Hurricanes By Julia Levine; Stephan Seiler
  2. Valuing Life over the Life Cycle By Pascal St-Amour
  3. Potato consumption in Argentina: Factors influencing preference for food safety attributes By Rodríguez, Julieta A.; Lupín, Beatriz
  4. How much are individuals willing to pay to offset their carbon footprint? The role of information disclosure and social norms By Schleich, Joachim; Alsheimer, Sven
  5. Striving for low-carbon lifestyles: An analysis of the mobility patterns of different urban household types with regard to emissions reductions in a real-world lab experiment in Berlin By Bäuerle, Max Juri
  6. On Welfare Analysis under Limited Attention By Mikhail Freer; Hassan Nosratabadi

  1. By: Julia Levine; Stephan Seiler
    Abstract: We analyze structural state dependence in brand choice using variation from brand switching during stock-outs caused by hurricanes. We derive a simple test for structural state dependence based on the time-series of choice persistence for households affected by the stock-outs. Using data from the bottled water category, we show that demand increases substantially before hurricanes, causing households to purchase different brands. We find that purchase behavior reverts back to its pre-hurricane trajectory immediately after a hurricane and we are not able to reject the null hypothesis of no structural state dependence. By contrast, the common approach of estimating structural state dependence based on temporal price variation via a discrete choice model yields a positive effect using data for the same category. We argue that our approach is better suited to identify the causal impact of past choices because it requires fewer assumption and is based on more plausibly exogenous variation in brand switching due to stock-outs.
    Keywords: brand choice, brand loyalty, state dependence, preference heterogeneity
    JEL: C23 C51 L81 M31
    Date: 2022
  2. By: Pascal St-Amour (University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); Swiss Finance Institute)
    Abstract: The twin arguments of (i) protecting society's most vulnerable members (e.g. agents with pre-existing medical conditions, elders) from life-threatening complications and (ii) avoiding delicate medical triage decisions were often used to warrant the substantial reallocation of economic and health care resources during the COVID-19 pandemic. These justifications raise the non-trivial arbitrage between the value of lives saved by intervention vs (i) the opportunity cost of engaged resources and vs (ii) other present or future lives affected by prioritizing a single illness. This paper solves in closed- form a flexible life cycle (LC) model of consumption, leisure and health choices to characterize the shadow value of life along the (i) person-specific (age, health, labour income, wealth, preferences) and (ii) mortality risk-specific (beneficial vs detrimental, temporary vs permanent changes) dimensions. The model is calibrated to reproduce observed household LC dynamics and yields plausible out-of-sample life values with a quality-adjusted life year (QALY) estimates between 95 and 115K$ and a Value of Statistical Life (VSL) close to 6.0M$. It identifies symmetric willingness to pay (WTP) and to accept (WTA) compensation for one-shot beneficial vs detrimental changes in longevity. Permanent changes yield asymmetric responses with larger willingness in the gains relative to loss domain and larger selling (WTA) relative to buying (WTP) prices for longevity. Ageing lowers both the value of and responsiveness to changes in longevity via falling resources and health and marginal continuation utility of living.
    Keywords: Value of Human Life, Value of Statistical Life, Gunpoint Value, Deterministic Longevity Value, Hicksian Compensating and Equivalent Variations, Willingness to Pay, Willingness to Accept Compensation, Mortality, Longevity, Non-Expected Utility.
    JEL: J17 D15 G11
    Date: 2022–08
  3. By: Rodríguez, Julieta A.; Lupín, Beatriz
    Abstract: The aim of this work is to quantitatively analyze the association between consumer's characteristics and their preferences for potato food safety attributes.
    Keywords: Consumo de Alimentos; Preferencias del Consumidor; Papa; Argentina;
    Date: 2022
  4. By: Schleich, Joachim; Alsheimer, Sven
    Abstract: This paper examines individuals' willingness to pay (WTP) to offset their carbon footprint in response to receiving information about (i) the size of their own carbon footprint, and (ii) further receiving in addition information about the difference between their carbon footprint and the target footprint, i.e. per-capita GHG emissions compatible with the 1.5êC target. The analysis employs a demographically representative survey among the adult population in Germany, which includes a comprehensive online carbon footprint calculator and randomized information treatments. The findings from estimating double hurdle models suggest that disclosing information about the size of the individual carbon footprint increases average WTP by about one third. Providing this information appears to affect the intensive margin but not the extensive margin. In comparison, providing information about the size of their carbon footprint together with information about the difference between their carbon footprint and the target footprint does not appear to affect individuals' WTP. Further, the WTP is related with income, gender, age, education, carbon literacy, the belief that carbon offsetting is effective, and with environmental preferences. In comparison, the findings provide no statistically significant evidence that the WTP is associated with the size of the individual carbon footprint, and whether participants consider their carbon footprint to be higher or lower than the carbon footprint of the average adult in the population.
    Keywords: carbon footprint,willingness to pay,social norms,information disclosure
    JEL: H41 Q54
    Date: 2022
  5. By: Bäuerle, Max Juri
    Abstract: The transport sector has so far shown little success in reducing emissions. Demand-side solutions such as lifestyle and behavioural changes of individuals and private households entail extensive reduction potential that could greatly complement technological solutions in transport. Private households are therefore relevant actors through their transport demand and modal choice. Yet, challenges and opportunities for reducing emissions vary with the household living situations and individual preconditions for action. The real-world lab experiment KLIB pursued to support and motivate households that intended to reduce their carbon footprint during an one year real lab phase using a carbon tracker tool. Based on the KLIB mobility data, this study aims to enhance understanding on the extent of emissions reductions through voluntary changes in mobility behaviour. This implies to identify through which changes in modal choice and transport demand how much of emissions reductions were achieved and where obstacles and limits to voluntary efforts existed. A mixed-methods research design is adopted: transport sociologically grounded type formation groups the KLIB households along relevant household characteristics. Subsequent type-based statistical data analysis examines changes of the types' mobility patterns and associated emissions. The findings indicate that within everyday ground mobility voluntary behavioural changes like the shift to low-carbon modes can lead to considerable emissions reductions depending on the household living situation and particularly car equipment. Nevertheless, car ownership presents a strong carbon lock-in and barrier to emissions reductions. Contradictory results are provided by air travel, where emissions increase for almost all household types, offsetting or outbalancing ground mobility savings. It emerges that behavioural changes are contextspecific and constrained by counteractive effects and obstacles, especially in holiday contexts and emissions-intensive air travel.
    Date: 2022
  6. By: Mikhail Freer; Hassan Nosratabadi
    Abstract: An observer wants to understand a decision-maker's preferences from her choice. She believes that decision-maker takes decisions under limited attention; i.e., does not consider all alternatives. In this paper, we make the point that given the nature of established experimental evidence, the existing models of limited attention are not quite helpful in fulfilling the observer's goal. Addressing this challenge, we propose a ``minimal'' adjustment to the theory of choice under limited attention by assuming that decision-maker makes at least one comparison in her decision-process. We illustrate that, as minimal as this adjustment is, it enriches the model with significant welfare relevance. We further apply our model to experimental data and establish that this significant increase in welfare-relevance comes with negligible costs in explanatory power.
    Date: 2022–08

This nep-dcm issue is ©2022 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.