nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2023‒07‒31
thirteen papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Medical Brain Drain – Assessing the Role of Job Attributes and Individual Traits By Bertoni, Marco; Chattopadhyay, Debdeep; Gu, Yuanyuan
  2. Heterogeneity in health insurance choice: An experimental investigation of consumer choice and feature preferences By Hermanns, Benedicta; Kairies-Schwarz, Nadja; Kokot, Johanna; Vomhof, Markus
  3. The Classical Theory of Supply and Demand By Sabiou Inoua; Vernon Smith
  4. Recursive Preferences and Ambiguity Attitudes By Massimo Marinacci; Giulio Principi; Lorenzo Stanca
  5. A Comparison of Sequential Ranked-Choice Voting and Single Transferable Vote By David McCune; Erin Martin; Grant Latina; Kaitlyn Simms
  6. Response toward Public Health Policy Ambiguity and Insurance Decisions By Qiang Li
  7. Choose Your Moments: Peer Review and Scientific Risk Taking By Richard T. Carson; Joshua S. Graff Zivin; Jeffrey G. Shrader
  8. Simple Estimation of Semiparametric Models with Measurement Errors By Kirill S. Evdokimov; Andrei Zeleneev
  9. Preference-Choice Mismatch and University Dropout By Fouarge, Didier; Heß, Pascal
  10. Food values and purchase decisions in an emerging market: lessons learned from Kenya By Opeyemi Femi-Oladunni; Pablo Ruíz-Palomino; María Pilar Martínez-Ruíz; Israel Roberto Pérez-Jiménez
  11. Into the Far West? Investigating Health Policy-Makers' Willingness to Adopt Decrementally Cost-Effective Innovations Using a DCE Approach By Ivan Tzintzun; Jonathan Sicsic; Lise Rochaix
  12. Specification testing with grouped fixed effects By Pigini, Claudia; Pionati, Alessandro; Valentini, Francesco
  13. The Impacts of Online Grocery Purchasing on SNAP Households By Pukelis, Kelsey

  1. By: Bertoni, Marco (University of Padova); Chattopadhyay, Debdeep; Gu, Yuanyuan (Macquarie University, Sydney)
    Abstract: We study physicians' migration intentions by undertaking a Discrete Choice Experiment with senior Italian medical students. Using the mixed logit models, we estimate how much income students are willing to forego for various job characteristics, including the job location. We find that future doctors are willing to sacrifice €13, 500/year on average to remain in their home country. Those with higher willingness to take risks, competitiveness, cognitive skills and altruism levels are more likely to migrate abroad, with implications for the quality of future doctors remaining in their home country. Furthermore, the valuations of several job characteristics differ substantially for jobs located in the home country or abroad, informing the design of job contracts that shall help retain young doctors.
    Keywords: brain drain, medical workforce, job design, personality traits, discrete choice experiments
    JEL: F66 I18 J08
    Date: 2023–06
  2. By: Hermanns, Benedicta; Kairies-Schwarz, Nadja; Kokot, Johanna; Vomhof, Markus
    Abstract: We investigate heterogeneity in patterns of preferences for health insurance features using health insurance choice data from a controlled laboratory experiment. Within the experiment, participants make consecutive insurance choices based on choice sets that vary in composition and size. We keep the health risk constant and equal for everyone. In addition, we implement a treatment that entails a feature-based insurance filter, allowing us to validate feature preferences. We also account for individually elicited risk preferences. On aggregate, we find that there is considerable heterogeneity in consumer choice. Participants differ particularly (a) in their willingness to pay to insure themselves against illnesses that differ in terms of their probability of occurrence and the size of the losses to be covered and (b) in their preference to forgo deductibles. However, if we measure the quality of individuals' decisions based on risk preferences, the heterogeneity among participants disappears. Our results suggest that heterogeneity in health insurance choices is not reflected in decision quality when we assume a rank-dependent expected utility model of risk preferences.
    Keywords: health insurance, consumer preferences, heterogeneity, laboratory experiment, risk preferences
    JEL: C91 I13 D81 D83 G22
    Date: 2023
  3. By: Sabiou Inoua; Vernon Smith
    Abstract: This paper introduces and formalizes the classical view on supply and demand, which, we argue, has an integrity independent and distinct from the neoclassical theory. Demand and supply, before the marginal revolution, are defined not by an unobservable criterion such as a utility function, but by an observable monetary variable, the reservation price: the buyer's (maximum) willingness to pay (WTP) value (a potential price) and the seller's (minimum) willingness to accept (WTA) value (a potential price) at the marketplace. Market demand and supply are the cumulative distribution of the buyers' and sellers' reservation prices, respectively. This WTP-WTA classical view of supply and demand formed the means whereby market participants were motivated in experimental economics although experimentalists (trained in neoclassical economics) were not cognizant of their link to the past. On this foundation was erected a vast literature on the rules of trading for a host of institutions, modern and ancient. This paper documents textually this reappraisal of classical economics and then formalizes it mathematically. A follow-up paper will articulate a theory of market price formation rooted in this classical view on supply and demand and in experimental findings on market behavior.
    Date: 2023–07
  4. By: Massimo Marinacci; Giulio Principi; Lorenzo Stanca
    Abstract: We illustrate the strong implications of recursivity, a standard assumption in dynamic environments, on attitudes toward uncertainty. In intertemporal consumption choice problems, recursivity always implies constant absolute ambiguity aversion (CAAA) when applying the standard dynamic extension of monotonicity. Our analysis also yields a functional equation called “generalized rectangularity†, as it generalizes the standard notion of rectangularity for recursive maxmin preferences to general certainty equivalents. Our results highlight that if uncertainty aversion is modeled as a form of convexity of preferences, recursivity limits us to only recursive variational preferences.
    Keywords: Dynamic choice, recursive utility, uncertainty aversion, absolute attitudes, generalized rectangularity.
    Date: 2023
  5. By: David McCune; Erin Martin; Grant Latina; Kaitlyn Simms
    Abstract: The methods of single transferable vote (STV) and sequential ranked-choice voting (RCV) are different methods for electing a set of winners in multiwinner elections. STV is a classical voting method that has been widely used internationally for many years. By contrast, sequential RCV has rarely been used, and only recently has seen an increase in usage as several cities in Utah have adopted the method to elect city council members. We use Monte Carlo simulations and a large database of real-world ranked-choice elections to investigate the behavior of sequential RCV by comparing it to STV. Our general finding is that sequential RCV often produces different winner sets than STV. Furthermore, sequential RCV is best understood as an excellence-based method which will not produce proportional results, often at the expense of minority interests.
    Date: 2023–06
  6. By: Qiang Li
    Abstract: Adjustments to public health policy are common. This paper investigates the impact of COVID-19 policy ambiguity on specific groups' insurance consumption. The results show that sensitive groups' willingness to pay (WTP) for insurance is 12.2% above the benchmark. Groups that have experienced income disruptions are more likely to suffer this. This paper offers fresh perspectives on the effects of pandemic control shifts.
    Date: 2023–06
  7. By: Richard T. Carson; Joshua S. Graff Zivin; Jeffrey G. Shrader
    Abstract: Science funding agencies such as the NIH, NSF, and their counterparts around the world are often criticized for being too conservative, funding incremental innovations over more radical but riskier projects. One explanation for their conservatism is the way the agencies use peer review of scientific proposals. Peer review is the cornerstone of research allocation decisions, but agencies typically base decisions on a simple average of peer review scores. More novel ideas are less likely to gain consistently high ratings across evaluators and are less likely to be funded. Using a discrete choice experiment conducted with a large sample of active biomedical researchers, we find that—in contrast to funding agencies—scientists systematically prefer to fund projects with more reviewer dissensus. Rather than purely focusing on the first moment of the distribution of reviewer scores, they also value the second moment. Further, scientists with the greatest domain expertise on a proposal are more enthusiastic about dissensus, and while appetite for dissensus shrinks as budgets become tighter, it does not disappear completely. Applying our estimates to prior studies mimicking NIH’s review process shows that incorporating expert scientists’ preferences for dissensus would change marginal funding decisions for ten percent of projects worth billions of dollars per year.
    JEL: H40 O3 O38
    Date: 2023–06
  8. By: Kirill S. Evdokimov; Andrei Zeleneev
    Abstract: We develop a practical way of addressing the Errors-In-Variables (EIV) problem in the Generalized Method of Moments (GMM) framework. We focus on the settings in which the variability of the EIV is a fraction of that of the mismeasured variables, which is typical for empirical applications. For any initial set of moment conditions our approach provides a corrected set of moment conditions that are robust to the EIV. We show that the GMM estimator based on these moments is root-n-consistent, with the standard tests and confidence intervals providing valid inference. This is true even when the EIV are so large that naive estimators (that ignore the EIV problem) may be heavily biased with the confidence intervals having 0% coverage. Our approach involves no nonparametric estimation, which is particularly important for applications with multiple covariates, and settings with multivariate, serially correlated, or non-classical EIV.
    Date: 2023–06
  9. By: Fouarge, Didier (ROA, Maastricht University); Heß, Pascal (Institute for Employment Research (IAB), Nuremberg)
    Abstract: Drawing on data from the German National Educational Panel Study (NEPS), we show that students who select majors that do not match their occupational preferences prior to enrolling in university are more likely to drop out than those who do choose majors that match their occupational preferences. Our findings suggest that this gap cannot be explained by institutional obstacles to entering a major. Instead, the primary mechanisms behind this phenomenon are indecisiveness and preference changes.
    Keywords: dropout, preferences, mismatch, tertiary education
    JEL: J24 D83
    Date: 2023–06
  10. By: Opeyemi Femi-Oladunni; Pablo Ruíz-Palomino; María Pilar Martínez-Ruíz; Israel Roberto Pérez-Jiménez
    Abstract: The objective of this research focuses on analysing the possible existence of consumers clusters in Kenya depending on their appreciation of food values. For this research objective, differences in the appreciation of food values were studied considering the socio-demographic traits of 500 consumers through a standardized questionnaire. In the empirical analysis, Spearman´s correlation test, two-step cluster analysis and logistic regressions were calculated. The results show the existence of variations in food value preferences between segments, determined by economic and socio-environmental factors. Nutrition value and environmental impact value were the most and least preferred values, respectively.
    Keywords: Food values, sociodemographic characteristics, Sub Sahara Africa, Logit regression, Two-step cluster analysis
    JEL: M3 L66
    Date: 2023–07
  11. By: Ivan Tzintzun (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jonathan Sicsic (LIRAES (URP_ 4470) - Laboratoire Interdisciplinaire de Recherche Appliquée en Economie de la Santé - UPCité - Université Paris Cité); Lise Rochaix (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, UP1 - Université Paris 1 Panthéon-Sorbonne)
    Abstract: In a context of increasingly limited resources, a number of strategies, such as the adoption of decrementally cost-effective interventions (d-CEIs), which are both less clinically effective and less costly, could offer potential levers at enhancing both efficiency and equity in healthcare systems. These interventions are located in the SouthWest (S-W) quadrant of the cost-effectiveness plane, and have yet received little attention from researchers or HTA agencies as they are often perceived as per se "unethical" or "unacceptable", hence the reference sometimes made to the S-W quadrant as the 'Far West'. The purpose of our paper is to investigate policy-makers' willingness to adopt d-CEIs using a choice experiment. We use a two-stage pairwise DCE survey to elicit (i) preferences for d-CEIs' attributes in forced choices and (ii) adoption preferences, i.e. the determinants of d-CEIs' adoption (unforced choices). We investigate the effect (and trade-offs) between three attributes: health loss (very small to significant), reversibility defined as the possibility to switch back to usual care (from possible to hardly possible) and cost-savings (from 5% to 15% of a fixed budget). Such trade-offs are contextualized by using two sensitivity attributes: disease severity (low and moderate) and savings uncertainty (low and high). Our final sample consists of 180 respondents with 46.7% originating from France and the remaining respondents from other EU countries. All attributes' levels have a significant effect in the two decision stages. The "health loss" attribute dominates in the first stage followed by "reversibility": we calculate that decision-makers would require 28.3% increase of budget savings to be indifferent between a scenario of small versus significant health losses and 14.5% budget savings to be indifferent between a scenario of possible and hardly possible reversibility. In contrast, the "reversibility" attribute dominates in the second stage suggesting that anticipated regret may play a role in adoption decisions.
    Keywords: health policy-makers choices, Discrete Choice Experiment, Decrementally Cost-Effective Interventions, Disinvestment
    Date: 2023–07
  12. By: Pigini, Claudia; Pionati, Alessandro; Valentini, Francesco
    Abstract: We propose a bootstrap generalized Hausman test for the correct specification of unobserved heterogeneity in fixed-effects panel data models. We consider as null hypotheses two scenarios in which the unobserved heterogeneity is either time-invariant or specified as additive individual and time effects. We contrast the standard fixed- effects estimators with the recently developed two-step grouped fixed-effects estimator, that is consistent in the presence of time-varying heterogeneity under minimal specification and distributional assumptions for the unobserved effects. The Hausman test exploits the general formulation for the variance of the vector of contrasts and critical values are computed via parametric percentile bootstrap, so as to account for the non-centrality of the asymptotic χ 2 distribution arising from the incidental parameters and approximation biases. Monte Carlo evidence shows that the test has correct size and good power in both linear and non linear specification.
    Keywords: Additive effects, Asymptotic bias, Hausman test, Parametric bootstrap, Time-varying heterogeneity
    JEL: C12 C23 C25
    Date: 2023–07–04
  13. By: Pukelis, Kelsey
    Keywords: Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics, Consumer/Household Economics
    Date: 2023

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