nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2022‒11‒14
seven papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. The price of risk in residential solar investments By Petrovich, Beatrice; Carattini, Stefano; Wüstenhagen, Rolf
  2. Trade, Jobs, and Worker Welfare By Artuc,Erhan; Bastos,Paulo S. R.; Lee,Eunhee
  3. The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia By Mekonnen,Alemu; Hassen,Sied; Jaime,Marcela; Toman,Michael A.; Zhang,Xiao-Bing
  4. A Structural Equation Modeling Approach to Understand User's Perceptions of Acceptance of Ride-Sharing Services in Dhaka City By Md. Mohaimenul Islam Sourav; Mohammed Russedul Islam; H M Imran Kays; Md. Hadiuzzaman
  5. Valuing forest ecosystem services in New Zealand By Hannah Kotula
  6. Bayesian Analysis of Mixtures of Lognormal Distribution with an Unknown Number of Components from Grouped Data By Kazuhiko Kakamu
  7. Policy Learning with New Treatments By Samuel Higbee

  1. By: Petrovich, Beatrice; Carattini, Stefano; Wüstenhagen, Rolf
    Abstract: Households are key actors in decarbonizing our economy, especially when it comes to investments in a decentralized energy system, such as solar photovoltaics (PV). The phasing-out of feed-in tariffs, and unexpected policy changes in the wake of an increasingly polarized climate debate, require residential PV investors to bear new risks. Conducting a discrete choice experiment coupled with a randomized informational treatment among potential residential solar investors in Switzerland, we test whether policy and market risks deter households from investing in solar. We find that salient policy risk reduces households' intention to invest in solar, especially for risk-averse individuals. Conversely, households seem less sensitive to market risk: residential solar investors accept volatile revenues, as long as a price floor for excess electricity sold to the grid is guaranteed. Our study suggests that keeping perceived policy uncertainty low is more important for residential solar investors than fully hedging against electricity market risk.
    Keywords: discrete choice experiment; information asymmetries; market risk; policy risk; residential solar investors; risk preferences
    JEL: D81 O33 Q42
    Date: 2021–02–01
  2. By: Artuc,Erhan; Bastos,Paulo S. R.; Lee,Eunhee
    Abstract: This paper examines the welfare effects of international trade on workers in a new dynamic general equilibrium discrete choice model of labor mobility, where the workers’ choice set of jobs is endogenous. The analysis exploits differential exposure of sectors and regions to destination-specific demand shocks to estimate the impacts of exports on wages, employment, and labor mobility, using employer-employee panel data for Brazil. It then employs the same empirical strategy to estimate structural parameters and the different components of changes in model-implied worker welfare. Counterfactual simulations show that the endogenous number of job options significantly magnifies the welfare effects of trade shocks.
    Keywords: Rural Labor Markets,International Trade and Trade Rules,Labor Markets,Trade and Multilateral Issues
    Date: 2021–04–13
  3. By: Mekonnen,Alemu; Hassen,Sied; Jaime,Marcela; Toman,Michael A.; Zhang,Xiao-Bing
    Abstract: Solar lanterns are a relatively inexpensive renewable-energy option for household lighting in developing countries. However, the transition to these lighting sources is slow. To understand why, this study uses the Becker-Degroot-Marschak bidding mechanism in a randomized field experiment to investigate the effect of information provision and subsidy policy instruments on the uptake of solar lanterns. Subjects’ willingness to pay tends to be low enough that most of them would purchase the solar lantern only if it is subsidized. Households with access to grid electricity have a lower willingness to pay and are less likely to adopt, while those using kerosene as a source of lighting are more likely to adopt. Access to credit also increases willingness to pay. Information treatments have limited impact: provision of different types of information about the private and public benefits of solar lantern use increases adoption only when it is combined with a high level of subsidies. Given the relatively low cost of solar lanterns, the results suggest that achieving universal electricity access under the United Nations’ Sustainable Development Goals by any means will require subsidizing access.
    Keywords: Energy and Mining,Energy and Environment,Energy Demand,Energy Technology&Transmission,Energy Policies&Economics,Renewable Energy,Rural and Renewable Energy
    Date: 2021–03–23
  4. By: Md. Mohaimenul Islam Sourav; Mohammed Russedul Islam; H M Imran Kays; Md. Hadiuzzaman
    Abstract: This research aims at building a multivariate statistical model for assessing users' perceptions of acceptance of ride-sharing services in Dhaka City. A structured questionnaire is developed based on the users' reported attitudes and perceived risks. A total of 350 normally distributed responses are collected from ride-sharing service users and stakeholders of Dhaka City. Respondents are interviewed to express their experience and opinions on ride-sharing services through the stated preference questionnaire. Structural Equation Modeling (SEM) is used to validate the research hypotheses. Statistical parameters and several trials are used to choose the best SEM. The responses are also analyzed using the Relative Importance Index (RII) method, validating the chosen SEM. Inside SEM, the quality of ride-sharing services is measured by two latent and eighteen observed variables. The latent variable 'safety & security' is more influential than 'service performance' on the overall quality of service index. Under 'safety & security' the other two variables, i.e., 'account information' and 'personal information' are found to be the most significant that impact the decision to share rides with others. In addition, 'risk of conflict' and 'possibility of accident' are identified using the perception model as the lowest contributing variables. Factor analysis reveals the suitability and reliability of the proposed SEM. Identifying the influential parameters in this will help the service providers understand and improve the quality of ride-sharing service for users.
    Date: 2022–10
  5. By: Hannah Kotula (Motu Economic and Public Policy Research)
    Abstract: Society depends on services and benefits provided by ecosystems. Yet, many of our actions affect ecosystems in ways that undermine long-term human wellbeing. Although ecosystems provide many services to society, many of these services are not accounted for in land-use decisions. The concept of “ecosystem services” offers a framework for understanding our dependence on nature and can encourage decision makers to consider broader impacts of land-use decisions beyond short-term economic rewards. Furthermore, economic valuation of ecosystem services offers a potential strategy for including the value of ecosystem services in decision making. Here I describe several ecosystem service frameworks and outline how these frameworks can inform land-use decisions, with a particular focus on those involving forests. I then describe methods for valuing ecosystem services. Following this, I provide examples relating to forest ecosystem services and draw conclusions based on existing valuation studies in New Zealand. My intention is to convey how an ecosystem service approach could be used in New Zealand to capture benefits provided by ecosystems that are often not accounted for in land-use decisions.
    Keywords: Ecosystem services, nonmarket valuation methods
    JEL: Q51 Q56 Q57
    Date: 2022–11
  6. By: Kazuhiko Kakamu
    Abstract: This study proposes a reversible jump Markov chain Monte Carlo method for estimating parameters of lognormal distribution mixtures for income. Using simulated data examples, we examined the proposed algorithm's performance and the accuracy of posterior distributions of the Gini coefficients. Results suggest that the parameters were estimated accurately. Therefore, the posterior distributions are close to the true distributions even when the different data generating process is accounted for. Moreover, promising results for Gini coefficients encouraged us to apply our method to real data from Japan. The empirical examples indicate two subgroups in Japan (2020) and the Gini coefficients' integrity.
    Date: 2022–10
  7. By: Samuel Higbee
    Abstract: I study the problem of a decision maker choosing a policy to allocate treatment to a heterogeneous population on the basis of experimental data that includes only a subset of possible treatment values. The effects of new treatments are partially identified based on shape restrictions on treatment response. I propose solving an empirical minimax regret problem to estimate the policy and show it has a tractable linear- and integer-programming formulation. I prove the maximum regret of the estimator converges to the lowest possible maximum regret at the rate at which heterogeneous treatment effects can be estimated in the experimental data or $N^{-1/2}$, whichever is slower. I apply my results to design targeted subsidies for electrical grid connections in rural Kenya, and estimate that $97\%$ of the population should be given a treatment not implemented in the experiment.
    Date: 2022–10

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