nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2022‒12‒05
fourteen papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Do numerical probabilities promote informed stated preference responses under inherent uncertainty? Insight from a coastal adaptation choice experiment By Christos Makriyannis; Robert J. Johnston; Ewa Zawojska
  2. On the inference about willingness to pay distribution using contingent valuation data By Mikołaj Czajkowski; Ewa Zawojska; Norman Meade; Ronaldo Seroa da Motta; Mike Welsh; Ramon Arigoni Ortiz
  3. Trade-offs in the transition to a blue economy - Mapping social acceptance of aquaculture expansion in Norway By Margrethe Aanesen; Mikołaj Czajkowski; Henrik Lindhjem; Ståle Navrud
  4. Estimating environmental damages of a tailings dam failure: The case of the Fundão Dam in Brazil By Mikołaj Czajkowski; Norman Meade; Ronaldo Seroa da Motta; Ramon Arigoni Ortiz; Mike Welsh; Gleiciane Carvalho Blanc
  5. Acceptance of Shared Autonomous Vehicles: A Literature Review of stated choice experiments By Benoît Lécureux; Adrien Bonnet; Ouassim Manout; Jaâfar Berrada; Louafi Bouzouina
  6. The Value of Water Quality for Coastal Recreation in New England, USA By Merrill, Nathaniel; Mazzotta, Marisa J.; Mulvaney, Kate K.; Sawyer, Joshua Paul; Twichell, Julia; Atkinson, Sarina F.; Keith, Darryl; Erban, Laura
  7. Anomalies or Expected Behaviors? Understanding Stated Preferences and Welfare Implications in Light of Contemporary Behavioral Theory By Leonhard K. Lades; Ewa Zawojska; Robert J. Johnston; Nick Hanley; Liam Delaney; Mikołaj Czajkowski
  8. The Influence of Payment Method: Do Consumers Pay More with Mobile Payment? By Yizhao Jiang
  9. Separation and rare events By Beiser-McGrath, Liam F.
  10. Rationalization of indecisive choice behavior by majoritarian ballots By Jos\'e Carlos R. Alcantud; Domenico Cantone; Alfio Giarlotta; Stephen Watson
  11. To promote responsible trade through conceptual metaphors. Experimental result from fair trade offerings By Julien Bouille; Frédéric Basso; J. Troiville
  12. Experienced versus Decision Utility: Large-Scale Comparison for Income-Leisure Preferences By Alpaslan AKAY; Olivier BARGAIN; H. Xavier JARA
  13. Heterogeneous Position Effects and the Power of Rankings By Rafael P. Greminger
  14. Intermodal Freight Transport in Europe: “CT Radar” - Identifying measures to improve combined road-rail freight transport By Elbert, R.

  1. By: Christos Makriyannis (Suffolk University, Department of Economics); Robert J. Johnston (Clark University, George Perkins Marsh Institute and Department of Economics); Ewa Zawojska (University of Warsaw, Faculty of Economic Sciences)
    Abstract: Inherent outcome uncertainty within stated preference surveys is invariant across valuation scenarios. It has received relatively little attention in the environmental stated preference literature. Specifically, it is unknown whether percentage probabilities—a ubiquitous means of communicating uncertainty in questionnaires—are an effective risk communication tool. This article systematically evaluates two treatments in a discrete choice experiment survey related to coastal climate change adaptation in Connecticut, USA: one provides only raw frequencies as a risk communication tool, while the other provides implied numerical probabilities in addition to the same raw frequencies. Results from a mixed logit model and from a latent class model that controls for sociodemographic influences show that the use of percentage probabilities to communicate inherent uncertainty has no additional effect on average welfare estimates or the choice behavior of respondents. Our findings suggest that percentage probabilities may not be an impactful way to communicate inherent uncertainty in environmental stated preference questionnaires.
    Keywords: flood adaptation, inherent uncertainty, discrete choice experiment, stated preference, mixed logit, risk communication, WTP-space
    JEL: D61 D83 H41 Q51 Q5
    Date: 2022
  2. By: Mikołaj Czajkowski (University of Warsaw, Faculty of Economic Sciences); Ewa Zawojska (University of Warsaw, Faculty of Economic Sciences); Norman Meade (Independent consultant); Ronaldo Seroa da Motta (State University of Rio de Janeiro); Mike Welsh (Independent consultant); Ramon Arigoni Ortiz (Independent consultant)
    Abstract: Although contingent valuation (CV) is one of the main sources of estimates of non-market values of environmental goods, little guidance exists regarding parametric approaches for modelling CV data, which would reliably estimate willingness-to-pay (WTP) values based on binary choice, payment card or open-ended preference elicitation data, among others. CV studies often rely on relatively simple approaches to modeling stated preference responses, without examining alternative modelling specifications. Lower-bound, non-parametric estimates seem to be preferred in legal cases, while studies that apply parametric approaches often select a specification among a limited set of commonly used distributions. To enhance the reliability of CV-based WTP estimates, we propose to adopt a more flexible approach to parametric modelling of a WTP distribution, by considering a wide range of parametric model specifications. We demonstrate the advantages of the proposed approach using databases from two large CV studies: the eutrophication reduction valuation for the Baltic Sea Action Plan and the Deepwater Horizon natural resource damage assessment. We find non-negligible differences in WTP value estimates across models with different assumed parametric distributions, and we observe the variation in the values to decrease when only better-fitting models are considered. This emphasizes the need for cautiously identifying the model best fitting to the data, instead of choosing a specification ad hoc without taking into account alternative parametric distributions. Focusing on the best-fitting parametric specifications, we provide alternative WTP value estimates for the two empirical cases studied.
    Keywords: contingent valuation, parametric modelling, stated preferences, willingness to pay, welfare estimates
    JEL: D61 H41 H43 Q51
    Date: 2022
  3. By: Margrethe Aanesen (Centre for applied research (SNF), Norway); Mikołaj Czajkowski (University of Warsaw, Faculty of Economic Sciences); Henrik Lindhjem (Menon Economics, Sørkedalsveien, Norway); Ståle Navrud (School of Economics and Business, Norwegian University of Life sciences (NMBU), Norway)
    Abstract: Aquaculture is currently the fastest growing food industry globally, and proposed expansion plans include substantial increases in production over the next decades. While this will improve global food security, contribute to the blue economy and create jobs locally, the potential negative impacts on the marine environment could be massive. The existing literature suggests that further research needs to be conducted into the dynamic nature of the social-ecological systems which host aquaculture. This paper presents the results of a choice experiment survey of Norwegian households’ trade-offs between salmon production and job creation, and the detrimental impacts on the marine environment. Most respondents were at the outset neutral or supportive of plans for a substantial increase in aquaculture production. However, when informed about potential environmental impacts in terms of marine plastics and salmon lice affecting wild salmon stocks, and asked to trade these off against the positive effects, the majority opposed the plans and expressed a positive willingness-to-pay to avoid the planned expansion. Applying a hybrid mixed multinomial logit model we find that income, education and to some extent age, along with environmental attitudes, explain most of the variation in people's preferences. Support for large aquaculture expansion is higher among people who consume farmed salmon frequently and those living in areas with a high density of aquaculture farms. Hence, we do not find the so-called “not in my backyard” (NIMBY) effect. These results, which arguably contrast with previous studies of environmental impacts from aquaculture, can be useful for public planners globally as they consider expanding the blue economy.
    Keywords: aquaculture expansion, environmental impacts, inhabitants’ preferences, choice experiment
    JEL: Q22 Q28 Q51
    Date: 2022
  4. By: Mikołaj Czajkowski (University of Warsaw, Faculty of Economic Sciences); Norman Meade (Independent consultant); Ronaldo Seroa da Motta (State University of Rio de Janeiro (UERJ)); Ramon Arigoni Ortiz (Independent consultant); Mike Welsh (Independent consultant); Gleiciane Carvalho Blanc (Lactec)
    Abstract: We present the results of a contingent valuation study aimed at estimating the monetary value of environmental and cultural/heritage injuries caused by the Fundão (tailings) Dam failure in Brazil in 2015 as perceived by the Brazilian population. While the valuation literature considering mining-related externalities is considerable, valuation studies of injuries resulting from mining incidents are scarce and most available damage assessments apply market valuation methods while rarely considering environmental and other nonmarket-valued impacts. The flooding and the release of tailings from the dam failure led to injuries to sediments, watercourse opacity, and oxygenation, changes in riparian morphology, loss of human life, mortality to fish and wildlife, changes in the food chain and more along the 675 km watercourse of the Doce River. This was arguably the greatest environmental and cultural/heritage injury ever caused by a single tailings dam collapse. The study followed state-of-the-art recommendations for the development, administration, and data analysis of stated-preference valuation methods. The survey of a representative sample of 5,195 Brazilian urban households revealed that the average lower-bound willingness-to-pay estimate to avoid a similar incident in the near future was 137 USD and the parametric-based estimate was 230 USD per household, which aggregates to 7.96 or 12.91 billion USD, respectively. This corresponds to environmental damages of 176 or 295 USD per m3 of tailings released.
    Keywords: tailings dam failure, nonmarket environmental damages, contingent valuation, willingness to pay
    JEL: Q51 Q30 Q20
    Date: 2022
  5. By: Benoît Lécureux (LAET - Laboratoire Aménagement Économie Transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique); Adrien Bonnet (VeDeCom - VEhicule DEcarboné et COmmuniquant et sa Mobilité); Ouassim Manout (LAET - Laboratoire Aménagement Économie Transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique); Jaâfar Berrada (VeDeCom - VEhicule DEcarboné et COmmuniquant et sa Mobilité); Louafi Bouzouina (Open University of the Netherlands [Heerlen], LAET - Laboratoire Aménagement Économie Transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Automated mobility has always conveyed fantasies about its ability to meet future mobility needs and challenges. If research is still debating the when, where and how of this mobility disruption, there seems to be a consensus on its advent. Meanwhile, the investigation of the demand for this mobility is of critical importance. Stated preference surveys are a common and powerful tool to foresee this demand. This paper tackles the question of the acceptance of shared autonomous vehicles (SAVs) by reviewing most significant published papers on travel demand and travel surveys for SAVs. Given the recent developments in the last three years, the paper updates and complements previous literature reviews. In contrast with previous research, this paper shows that the impact of various factors on the intention to use SAVs is still controversial. This includes age, gender, income or car ownership. We identify most consensual and controversial effects and correspondingly suggest future research tracks to address some the identified gaps.
    Keywords: Shared Autonomous vehicles,Acceptance,Discrete choice,Mode choice,Stated preferences,Attitudes,Literature review Declarations:
    Date: 2022–10–14
  6. By: Merrill, Nathaniel; Mazzotta, Marisa J.; Mulvaney, Kate K.; Sawyer, Joshua Paul (EPA); Twichell, Julia; Atkinson, Sarina F.; Keith, Darryl; Erban, Laura
    Abstract: Water recreation is valuable to people and its value can be affected by changes in water quality. This paper presents the results of a primary data collection effort using a revealed preference survey to elicit coastal New England, USA residents’ values for water recreation and water quality. We combined the survey responses with a comprehensive dataset of coastal attributes, including in-water and remotely sensed water quality metrics for the coast of New England. The results provide an updated willingness-to-pay for a coastal recreation trip of $26-$28 (USD). Using a travel cost model framework, we found water clarity and the bacterial conditions of coastal waters to be practical water quality inputs to economic analysis, available at appropriate scales and meaningful to people and their behavior. Changes in clarity and bacterial conditions affected trip values, with a $4-$5 change for a meter in clarity and $0.13 for a one-unit change, respectively. We demonstrate their utility and the large potential value of improving water quality through welfare analysis scenarios for Narragansett Bay, Rhode Island, and Cape Cod, Massachusetts, USA. The paper discusses generalizable lessons for improving the policy relevance and applicability of water quality valuation studies in the U.S. and worldwide through improved water quality data collection and aggregation combined with application of scalable analysis tools for valuation.
    Date: 2022–09–08
  7. By: Leonhard K. Lades (Environmental Policy & Geary Institute, University College Dublin); Ewa Zawojska (University of Warsaw, Faculty of Economic Sciences); Robert J. Johnston (George Perkins Marsh Institute and Department of Economics, Clark University); Nick Hanley (Institute of Biodiversity Animal Health & Comparative Medicine, University of Glasgow); Liam Delaney (Department of Psychological and Behavioural Science, The London School of Economics and Political Science); Mikołaj Czajkowski (University of Warsaw, Faculty of Economic Sciences)
    Abstract: The stated preference literature contains an expansive body of research on behavioral anomalies, typically understood as response patterns that are inconsistent with standard neoclassical choice theory. While the literature often implies that anomalous behaviors are distinct to stated preferences, widespread evidence of similar patterns across real-world settings raises the potential for an alternative interpretation. We argue that these anomalies might actually reflect behaviors that are to be expected once deviations from the standard economic model and behavioral reactions to the choice architecture in stated preference surveys are considered. The article reviews and organizes the evidence of so-called “anomalous” stated preference behaviors within the context of behavioral science to provide guidance for applied welfare economics. We coordinate evidence on these anomalies using a typology grounded in behavioral science, which groups non-standard behaviors into: non-standard preferences, non-standard beliefs, and non-standard decision-making. We apply this typology to organize the evidence, clarify nomenclature, and understand the implications of non-standard behaviors in stated preference studies for applied welfare analysis. Observing the systematic and common nature of these behaviors in actual and hypothetical settings, we outline possibilities to overcome associated challenges for applied welfare analysis, by adapting new frameworks for welfare analysis proposed within behavioral science.
    Keywords: anomalies, behavioral science, non-standard behaviors, stated preferences, welfare analysis
    JEL: D61 D91 Q51
    Date: 2022
  8. By: Yizhao Jiang
    Abstract: The introduction of new payment methods has resulted in one of the most significant changes in the way we consume goods and services. In this paper, I present results of a field and a laboratory experiment designed to determine the effect of payment method (cash vs. mobile payment) on spending, and a meta-analysis of previous literature about payment method effect. In the field experiment, I collected cashier receipts from Chinese supermarkets. Compared to cash payment, mobile payments significantly increased the amount purchased and the average amount spent on each item. This effect was found to be particularly large for high price elasticity goods. In the laboratory experiment, participants were randomly assigned to one of four groups that varied with respect to the kind of payment and the kind of incentives, eliminating the potential endogeneity problem from the field experiment. I found that compared to cash, mobile payments lead to a significantly higher willingness to pay (WTP) for consumption. In contrast to others, I found that pain of paying does not moderate the payment method effect; however, other psychological factors were found to work as potential mechanisms for affecting WTP.
    Date: 2022–10
  9. By: Beiser-McGrath, Liam F.
    Abstract: When separation is a problem in binary dependent variable models, many researchers use Firth's penalized maximum likelihood in order to obtain finite estimates (Firth, 1993; Zorn, 2005; Rainey, 2016). In this paper, I show that this approach can lead to inferences in the opposite direction of the separation when the number of observations are sufficiently large and both the dependent and independent variables are rare events. As large datasets with rare events are frequently used in political science, such as dyadic data measuring interstate relations, a lack of awareness of this problem may lead to inferential issues. Simulations and an empirical illustration show that the use of independent weakly-informative prior distributions centered at zero, for example, the Cauchy prior suggested by Gelman et al. (2008), can avoid this issue. More generally, the results caution researchers to be aware of how the choice of prior interacts with the structure of their data, when estimating models in the presence of separation.
    Keywords: Bayesian; categorical data analysis; discrete choice models
    JEL: C1
    Date: 2020–12–11
  10. By: Jos\'e Carlos R. Alcantud; Domenico Cantone; Alfio Giarlotta; Stephen Watson
    Abstract: We describe a model that explains possibly indecisive choice behavior, that is, quasi-choices (choice correspondences that may be empty on some menus). The justification is here provided by a proportion of ballots, which are quasi-choices rationalizable by an arbitrary binary relation. We call a quasi-choice $s$-majoritarian if all options selected from a menu are endorsed by a share of ballots larger than $s$. We prove that all forms of majoritarianism are equivalent to a well-known behavioral property, namely Chernoff axiom. Then we focus on two paradigms of majoritarianism, whereby either a simple majority of ballots justifies a quasi-choice, or the endorsement by a single ballot suffices - a liberal justification. These benchmark explanations typically require a different minimum number of ballots. We determine the asymptotic minimum size of a liberal justification.
    Date: 2022–10
  11. By: Julien Bouille (LIRIS - Laboratoire interdisciplinaire de recherche en innovations sociétales - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes); Frédéric Basso (LSE - London School of Economics and Political Science); J. Troiville (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The present research introduces the strengths of conceptual metaphors (Lakoff & Johnson, 1980) to promote responsible trade products and services as well as their stakeholders and underpinning fundamental principles. We suggest that the use of conceptual metaphors tends to foster the consumer appropriation of its various related societal issues. We then report the results of an experiment testing the impact of conceptual metaphors on consumers' attitudes towards fair trade. The results show that some of these metaphors positively influence the perceived societal importance of fair trade and the willingness to pay for a fairly traded product. The findings of this study on metaphors are discussed from theoretical and managerial standpoints, and more specifically for socially conscious stakeholders involved in various linguistic and marketing contexts.
    Abstract: Cette recherche suggère que les métaphores conceptuelles aident à la valorisation du commerce responsable. Les résultats d'une expérimentation testant l'impact de métaphores conceptuelles sur les attitudes des consommateurs vis-à-vis du commerce équitable sont rapportés. Ils montrent que certaines métaphores exercent une influence sur l'importance sociétale perçue du commerce équitable et la disposition à payer. Ces enseignements sont discutés aux plans théorique et managérial pour les acteurs des filières responsables opérant dans des contextes marketing variés.
    Keywords: conceptual metaphors,responsible trade and consumption,fair trade,cognitive linguistics,experimental design,métaphores conceptuelles,commerce et consommation responsables,commerce équitable,linguistique cognitive,expérimentation
    Date: 2021
  12. By: Alpaslan AKAY; Olivier BARGAIN; H. Xavier JARA
    Abstract: Subjective well-being (SWB) data is increasingly used to perform welfare analysis. Interpreted as ‘experienced utility’, it has recently been compared to ‘decision utility’ using small-scale experiments most often based on stated preferences. We transpose this comparison to the framework of non-experimental and large-scale data commonly used for policy analysis, focusing on the income-leisure domain where redistributive policies operate. Using the British Household Panel Survey, we suggest a ‘deviation’ measure, which is simply the difference between actual working hours and SWB-maximizing hours. We show that about three-quarters of individuals make decisions that are not inconsistent with maximizing their SWB. We discuss the potential channels that explain the lack of optimization when deviations are significantly large. We find proxies for a number of individual and external constraints, and show that constraints alone can explain at least half of the deviations. In our context, deviations partly reflect the inability of the revealed preference approach to account for labor market rigidities, so the actual and SWB-maximizing hours should be used in a complementary manner. The suggested approach based on our deviation metric could help identify labor market frictions.
    Keywords: Decision Utility, Experienced Utility, Labor Supply, Subjective Well-Being
    JEL: C90 I31 J22
    Date: 2022
  13. By: Rafael P. Greminger
    Abstract: Most online retailers, search intermediaries, and platforms present products on product lists. By changing the ordering of products on these lists (the "ranking"), these online outlets can aim to improve consumer welfare or increase revenues. This paper studies to what degree these objectives differ from each other. First, I show that rankings can increase both revenues and consumer welfare by increasing the overall purchase probability through heterogeneous position effects. Second, I provide empirical evidence for this heterogeneity and quantify revenue and consumer welfare effects across different rankings. For the latter, I develop an estimation procedure for the search and discovery model of Greminger (2022) that yields a smooth likelihood function by construction. Comparing different counterfactual rankings shows that rankings targeting revenues often also increase consumer welfare. Moreover, these revenue-based rankings reduce consumer welfare only to a limited extent relative to a consumer-welfare-maximizing ranking.
    Date: 2022–10
  14. By: Elbert, R.
    Date: 2022–09

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