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on Discrete Choice Models |
| By: | Connor R. Forsythe; Cristian Arteaga; John P. Helveston |
| Abstract: | This paper introduces the Heterogeneous Aggregate Valence Analysis (HAVAN) model, a novel class of discrete choice models. We adopt the term "valence'' to encompass any latent quantity used to model consumer decision-making (e.g., utility, regret, etc.). Diverging from traditional models that parameterize heterogeneous preferences across various product attributes, HAVAN models (pronounced "haven") instead directly characterize alternative-specific heterogeneous preferences. This innovative perspective on consumer heterogeneity affords unprecedented flexibility and significantly reduces simulation burdens commonly associated with mixed logit models. In a simulation experiment, the HAVAN model demonstrates superior predictive performance compared to state-of-the-art artificial neural networks. This finding underscores the potential for HAVAN models to improve discrete choice modeling capabilities. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.00184&r=dcm |
| By: | Donald S. Kenkel; Alan D. Mathios; Grace N. Phillips; Revathy Suryanarayana; Hua Wang; Sen Zeng |
| Abstract: | The Food and Drug Administration has proposed to prohibit menthol cigarettes, which are smoked by almost 19 million people in the U.S. Illegal markets for menthol cigarettes could not only blunt the prohibition’s intended consequence to reduce smoking but could also lead to unintended consequences. We use data from a discrete choice experiment to estimate a mixed logit model which predicts that the prohibition of menthol cigarettes would substantially increase the fraction of menthol smokers who attempt to quit. However, our model also predicts a substantial potential consumer demand for illegal menthol cigarettes. Depending on the impact of illegality on product prices, our model predicts the potential demand-side of an illegal market for menthol cigarettes could be 59-92 percent the size of the status quo market if menthol e-cigarettes are legal, and 69-100 percent the size of the status quo market if menthol e-cigarettes are also illegal. Our mixed logit model estimated in willingness to pay space implies that the mean WTP to avoid an illegal retail market is equivalent to a tax of $8.44 per pack. In our partial cost-benefit analysis, the opportunity costs of prohibition exceed the value of the reduction in mortality risks from secondhand smoke by $15.4 billion annually. |
| JEL: | D12 I12 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32148&r=dcm |
| By: | van Cranenburgh, Sander; Meyerhoff, Jürgen; Rehdanz, Katrin; Wunsch, Andrea |
| Abstract: | Efficient experimental designs aim to maximise the information obtained from stated choice data to estimate discrete choice models' parameters statistically efficiently. Almost without exception efficient experimental designs assume that decision-makers use a Random Utility Maximisation (RUM) decision rule. When using such designs, researchers (implicitly) assume that the decision rule used to generate the design has no impact on respondents' choice behaviour. This study investigates whether the decision rule assumption underlying an experimental design affects respondents' choice behaviour. We use four stated choice experiments on coastal adaptation to climate change: Two are based on experimental designs optimised for utility maximisation and two are based on experimental designs optimised for a mixture of RUM and Random Regret Minimisation (RRM). Generally, we find that respondents place value on adaptation measures (e.g., dykes and beach nourishments). We evaluate the models' fits and investigate whether some choice tasks particularly invoke RUM or RRM decision rules. For the latter, we develop a new sampling-based approach that avoids the confounding between preference and decision rule heterogeneity. We find no evidence that RUM-optimised designs invoke RUM-consistent choice behaviour. However, we find a relationship between some of the attributes and decision rules, and compelling evidence that some choice tasks invoke RUM consistent behaviour while others invoke RRM consistent behaviour. This implies that respondents’ choice behaviour and choice modelling outcomes are not exogenous to the choice tasks, which can be particularly critical when information on preferences is used to inform actual decision-making on a sensitive issue of common interest as climate change. |
| Keywords: | Coastal adaptation, Climate change, Experimental design theory, Decision rules, Random regret minimisation |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkie:281987&r=dcm |
| By: | Philipp Lergetporer (Technical University of Munich, CESifo and IZA); Katharina Wedel (ifo Institute at the Ludwigs-Maximilians-University of Munich); Katharina Werner (ifo Institute at the Ludwigs-Maximilians-University of Munich) |
| Abstract: | We study how beliefs about the automatability of workers’ occupation affect labor-market expectations and willingness to participate in further training. In our representative online survey, respondents on average underestimate the automation risk of their occupation, especially those in high-automatability occupations. Randomized information about their occupations’ automatability increases respondents’ concerns about their professional future, and expectations about future changes in their work environment. The information also increases willingness to participate in further training, especially among respondents in highly automatable occupation (+five percentage points). This uptick substantially narrows the gap in willingness to train between those in high- and low-automatability occupations. |
| Keywords: | automation, further training, labor-market expectations, survey experiment, information |
| JEL: | J24 O33 I29 D83 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:aiw:wpaper:32&r=dcm |
| By: | Guibril Zerbo |
| Abstract: | This article examines the determinants of willingness to pay (WTP) for flood insurance, focusing on the role of information and information sources. We use data from a September 2022 field survey of 593 individuals in urban Burkina Faso. We find that 71.3% of individuals are willing to spend money on insurance. But many individuals have a lower willingness to pay than the expected loss. This suggests that individuals would appreciate insurance cover, but do not have sufficient income to pay the insurance premium. We also find that being well informed about flood risk increases the likelihood of paying the expected loss for insurance. However, obtaining flood information from television increases WTP whereas radio does not. These results suggest the need to take information sources into account when developing effective communication policies against these risks. Another result is that recourse to the family and risk aversion reduce PAD. Finally, trust in insurers and ambiguity aversion increase individuals' chances of paying the expected loss for insurance. |
| Keywords: | Natural disasters, Flood risk; Insurance, Willingness to pay; Information |
| JEL: | D81 D83 G22 Q54 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2024-7&r=dcm |
| By: | Martin Brown; Yves Nacht; Dr. Thomas Nellen; Helmut Stix |
| Abstract: | We examine how payment choice affects discretionary spending for a representative sample of consumers. Our analysis is motivated by a model of intertemporal choice in which intramonth liquidity constraints are endogenously determined by payment choice and cash management. In the model, present-biased consumers overspend if they choose to pay by card, as their spending is not limited by the amount of cash at hand. Our empirical analysis is based on matched payment diary, payment methods and behavioral survey data. We find that present-biased consumers spend more, the more often they use cashless payment instruments. The effect of cashless payments on spending is strong both for low- and high-income consumers but not among young consumers. We find no robust evidence that consumers choose cash payments to self-constrain their spending. |
| Keywords: | Digital payments, Cash management, Payment choice, Present bias, Intertemporal choice, Preanalysis plan |
| JEL: | E41 G20 O33 D14 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:snb:snbwpa:2023-06&r=dcm |
| By: | Elisa Facchetti; Lorenzo Neri; Marco Ovidi |
| Abstract: | Understanding parental response to non-test score attributes is crucial to design effective school choice systems. We study an intervention providing hard-to-find information on the school environment at local institutions, while holding information on school performance constant. Outflow to private education is reduced by 17%, with larger responses among advantaged students. Parents respond by increasing take-up of offers from local schools, intensifying competition for seats. Social interactions increase the program’s impact by 40%. Consistent with our interpretation, the intervention does not affect parental demand for school performance. We conclude that simple, low-cost interventions can improve state schools’ finances and peer quality. |
| Keywords: | school choice, non-test score school attributes, information intervention |
| JEL: | I24 I28 H75 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10926&r=dcm |
| By: | Olivia Bertelli (DIAL - Développement, institutions et analyses de long terme, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Thomas Calvo (DIAL - Développement, institutions et analyses de long terme, IRSEM - Institut de recherche stratégique de l'Ecole militaire - Ministère des armées, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Massa Coulibaly; Moussa Coulibaly; Emmanuelle Lavallée (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Marion Mercier (DIAL - Développement, institutions et analyses de long terme, UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain = Catholic University of Louvain, CEFREM - Centre de Formation et de Recherche sur les Environnements Méditérranéens - UPVD - Université de Perpignan Via Domitia - INSU - CNRS - Institut national des sciences de l'Univers - CNRS - Centre National de la Recherche Scientifique, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Sandrine Mesplé-Somps (DIAL - Développement, institutions et analyses de long terme, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); O. Z. Traoré |
| Abstract: | In standard household surveys, the data collected are exposed to response bias, particularly for questions considered sensitive. The List Experiment method is an alternative survey technique for limiting these biases. This article presents the results of an experimental survey conducted using this method with 1, 509 individuals throughout Mali. Individuals were surveyed by telephone during the summer of 2021 about their experiences and political attitudes related to insecurity. From a methodological point of view, we have drawn a number of lessons from the survey: among others, a very good understanding and acceptability of the method by the respondents, due in particular to the quality of the interviewers and supervisors; the need for a more complex sample design than for a standard questionnaire; and the importance of a short questionnaire when surveying by telephone. From an analytical point of view, the survey reveals the existence of significant social desirability biases - particularly for questions concerning political attitudes in relation to insecurity. |
| Abstract: | Dans les enquêtes standards auprès des ménages, les données collectées sont exposées à des biais de réponses, particulièrement pour les questions considérées comme sensibles. La méthode par comptage de réponses est une technique d'enquête alternative permettant de limiter ces biais. Cet article présente les résultats d'une enquête expérimentale menée selon cette méthode auprès de 1 509 individus sur l'ensemble du territoire malien. Les personnes ont été sondées par téléphone durant l'été 2021 à propos d'expériences et d'attitudes politiques liées à l'insécurité. D'un point de vue méthodologique, nous en tirons plusieurs enseignements : entre autres, une très bonne compréhension et acceptabilité de la méthode par les enquêté·e·s, qui tient notamment à la qualité des enquêteur·trice·s et des superviseur·se·s ; la nécessité d'un plan de sondage plus complexe que pour un questionnaire standard ; et l'importance d'un questionnaire court lorsqu'on enquête par téléphone. Du point de vue analytique, l'enquête fait ressortir l'existence de biais déclaratifs significatifs – notamment pour les questions portant sur les préférences politiques en lien avec l'insécurité. |
| Keywords: | Enquête téléphonique, phone survey, biais déclaratif, social desirability, Mali, List experiment, sécurité, security |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04442342&r=dcm |
| By: | Greaves, Ellen (European University Institute); Turon, Hélène (University of Bristol) |
| Abstract: | Geographic school admissions criteria bind residential and school choices for some parents, and could create externalities in equilibrium for non-parents through displacement or higher rent. Through a dynamic structural model, we show that the policy decision of geographic versus non-geographic school admissions criteria has important implications for equilibrium outcomes in school and housing markets. Geographic admissions criteria segregate schools, but integrate neighborhoods according to income. Incorporating non-parents into the model challenges the existing understanding of how public schools affect the housing market: non-parent households dampen the equilibrium price premium around popular schools; non-parent households are never better off under geographic admissions. |
| Keywords: | school choice, residential choice, school admissions criteria |
| JEL: | I21 I24 R21 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16805&r=dcm |