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on Discrete Choice Models |
| By: | Somers, Melline (RS: GSBE other - not theme-related research, ROA / Health, skills and inequality); Stolp, Tom (RS: GSBE other - not theme-related research, ROA / Education and transition to work); Burato, Francesca; van Merode, Frits (Faculteit FHML Centraal, RS: CAPHRI - R2 - Creating Value-Based Health Care); Vooren, Melvin |
| Abstract: | The healthcare and education sectors suffer from shortages of nurses and teachers. Extending their working hours has often been proposed as a solution to this. In this study, we conduct a discrete choice experiment (DCE) in the Netherlands to elicit nurses’ and teachers’ preferences for different jobs and working conditions. We present both nurses and teachers with nine hypothetical choice sets, each consisting of two jobs that differ in seven observable job attributes. From the DCE, we infer workers’ willingness to pay for these different job characteristics. Moreover, we calculate how many additional hours workers would be willing to work if a specific workplace condition were met. We find that both nurses and teachers most negatively value high work pressure. Spending a lot of time on patient-related tasks is highly valued by nurses, followed by having more control over working hours. Next to work pressure, teachers place significant importance on receiving social support from both colleagues and managers. Nurses and teachers who work part-time require higher incentives to work additional hours compared to full-time workers. |
| JEL: | J45 J81 |
| Date: | 2024–10–30 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umaror:2024005e |
| By: | Charles F. Manski; Eytan Sheshinski |
| Abstract: | We consider a utilitarian planner with the power to design a discrete choice set for a heterogeneous population with bounded rationality. We find that optimal paternalism is subtle. The policy that most effectively constrains or influences choices depends on the preference distribution of the population and on the choice probabilities conditional on preferences that measure the suboptimality of behavior. We first consider the planning problem in abstraction. We next examine policy choice when individuals measure utility with additive random error and maximize mismeasured rather than actual utility. We then analyze a class of problems of binary treatment choice under uncertainty. Here we suppose that a planner can mandate a treatment conditional on publicly observed personal covariates or can decentralize decision making, enabling persons to choose their own treatments. Bounded rationality may take the form of deviations between subjective personal beliefs and objective probabilities of uncertain outcomes. We apply our analysis to clinical decision making in medicine. Having documented that optimization of paternalism requires the planner to possess extensive knowledge that is rarely available, we address the difficult problem of paternalistic policy choice when the planner is boundedly rational. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.13658 |
| By: | Anushka De; Diganta Mukherjee |
| Abstract: | The objective of this study is applying a utility based analysis to a comparatively efficient design experiment which can capture people's perception towards the various components of a commodity. Here we studied the multi-dimensional poverty index and the relative importance of its components and their two-factor interaction effects. We also discussed how to model a choice based conjoint data for determining the utility of the components and their interactions. Empirical results from survey data shows the nature of coefficients, in terms of utility derived by the individuals, their statistical significance and validity in the present framework. There has been some discrepancies in the results between the bootstrap model and the original model, which can be understood by surveying more people, and ensuring comparative homogeneity in the data. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.11398 |
| By: | Guo Yan |
| Abstract: | We propose a new estimator for nonparametric binary choice models that does not impose a parametric structure on either the systematic function of covariates or the distribution of the error term. A key advantage of our approach is its computational efficiency. For instance, even when assuming a normal error distribution as in probit models, commonly used sieves for approximating an unknown function of covariates can lead to a large-dimensional optimization problem when the number of covariates is moderate. Our approach, motivated by kernel methods in machine learning, views certain reproducing kernel Hilbert spaces as special sieve spaces, coupled with spectral cut-off regularization for dimension reduction. We establish the consistency of the proposed estimator for both the systematic function of covariates and the distribution function of the error term, and asymptotic normality of the plug-in estimator for weighted average partial derivatives. Simulation studies show that, compared to parametric estimation methods, the proposed method effectively improves finite sample performance in cases of misspecification, and has a rather mild efficiency loss if the model is correctly specified. Using administrative data on the grant decisions of US asylum applications to immigration courts, along with nine case-day variables on weather and pollution, we re-examine the effect of outdoor temperature on court judges' "mood", and thus, their grant decisions. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.15734 |
| By: | Simone M Cuiabano |
| Abstract: | The document presents an innovative analysis of ethanol demand, emphasizing the significant role of spatially differentiated fuel retailers in shaping consumer preferences and fuel-switching behavior. Utilizing a nested logit model and data from Brazilian fuel retailers, the study reveals that ethanol demand is highly responsive to price changes, with relative price elasticity exceeding that of gasoline. Key findings indicate that retailer characteristics, such as branding and location, influence consumer preferences, highlighting the importance of considering spatial differentiation in demand estimation models. The study's results have profound implications for policy-making, suggesting that encouraging the use of ethanol as an alternative energy source can serve as an effective climate change mitigation strategy. The recommendations stress the need for policies that account for consumer price sensitivities and the competitive landscape of fuel retailers. This could enhance the adoption of cleaner fuels and reduce dependency on imported oil, aligning with broader environmental and economic objectives. |
| Keywords: | ethanol; demand estimation; nested logit; fuel retailer; ethanol demand; retailer characteristic; influence consumer preference; Fuel prices; Gasoline; Logit models; Price elasticity; Agricultural prices; West Africa; Europe |
| Date: | 2024–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/231 |
| By: | Matias Giaccobasso (VATT Institute for Economic Research); Brad Nathan (Rutgers University); Ricardo Perez-Truglia (University of California, Los Angeles); Alejandro Zentner (University of Texas at Dallas) |
| Abstract: | Do perceptions about government spending affect willingness to pay taxes? We test this hypothesis with a natural field experiment that focuses on the allocation of property taxes to public schools. Our results show that taxpayers often misperceive the destination of their tax dollars. By introducing shocks to households’ perceptions via an information-provision experiment, we find that perceptions of how tax dollars are used significantly affect the probability of filing a tax appeal. Moreover, the effects are consistent with reciprocal motivations: individuals are more willing to pay taxes if they believe that the government services funded by those taxes will provide greater personal benefit. |
| Keywords: | taxes, protest, public services, education, redistribution |
| JEL: | C93 H26 I22 K34 K42 Z13 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:fit:wpaper:28 |
| By: | Vittorioemanuele Ferrante |
| Abstract: | La relazione di preferenza può essere vista come ordinamento valoriale che funge da strumento di scelta di alternative che non ne abbiamo di migliori, da parte di un decisore che sia nella posizione di considerarle, per cosí dire, “dall’alto;†oppure, come criterio che un decisore via via persegue quando sia “immerso nel divenire†del mondo e abbia la possibilità di sostituire l’alternativa presso cui è, con una migliore. La prima prospettiva è quella ortodossa; la seconda è stata introdotta da Antonio Gay negli anni ’80. Il lavoro considera svariati aspetti di questa dottrina. |
| Keywords: | Incomplete preferences, choice, substitution, subjective value. |
| JEL: | B41 C02 D01 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2024_25.rdf |
| By: | McRae, Shaun D; Wolak, Frank A |
| Abstract: | High electricity prices hinder efforts to decarbonize through electrification. In this paper, we demonstrate the inefficiencies of the retail electricity tariffs for both residential and non residential consumers in Colombia. We show the low take up for a 2012 policy in Colombia that reduced electricity prices for industrial users. As an alternative, we propose a novel tariff design that eliminates customer class distinctions, aligns prices with marginal costs, and introduces a fixed charge based on estimated willingness to pay. Using data for the entire population of electricity consumers in Colombia, we illustrate the tariff’s potential to eliminate existing distortions in electricity pricing across customer classes while limiting bill increases for low income households. |
| Keywords: | Energía, |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:dbl:dblwop:2266 |
| By: | Hammond, Peter J (University of Warwick) |
| Abstract: | A decision-making agent is usually assumed to be Bayesian rational, or to maximize subjective expected utility, in the context of a completely and correctly speci ed decision model. Following the discussion in Hammond (2007) of Schumpeter's (1911, 1934) concept of entrepreneurship, and of Shackle's (1953) concept of potential surprise, this paper considers enlivened decision trees whose growth over time cannot be accurately modelled in full detail. An enlivened decision tree involves more severe limitations than model mis-speci cation, unforeseen contingencies, or unawareness, all of which are typically modelled with reference to a universal state space large enough to encompass any decision model that an agent may consider. We consider three motivating examples based on: (i) Homer's classic tale of Odysseus and the Sirens; (ii) a two-period linear-quadratic model of portfolio choice; (iii) the game of Chess. Though our novel framework transcends standard notions of risk or uncertainty, a form of Bayesian rationality is still possible. Instead of subjective probabilities of different models of a classical finite decision tree, we show that Bayesian rationality and continuity imply subjective expected utility maximization when some terminal nodes have attached real-valued subjective evaluations instead of consequences. Moreover, subjective evaluations lie behind, for example, the kind of Monte Carlo tree search algorithm that has been used by some powerful chess-playing software packages. |
| Keywords: | Prerationality ; consequentialist decision theory ; entrepreneurship ; potential surprise ; enlivened decision trees ; subjective evaluation of continuation ; subtrees ; Monte Carlo tree search. JEL Codes: D81 ; D91 ; D11 ; D63 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1524 |
| By: | Horton, John J.; Johari, Ramesh; Kircher, Philipp (Université catholique de Louvain, LIDAM/CORE, Belgium) |
| Abstract: | In a labor market model with cheap talk, employers can send messages about their will- ingness to pay for higher-ability workers, which job-seekers can use to direct their search and tailor their wage bid. Introducing such messages leads—under certain conditions— to an informative separating equilibrium that affects the number of applications, types of applications, and wage bids across firms. This model is used to interpret an experiment conducted in a large online labor market: employers were given the opportunity to state their relative willingness to pay for more experienced workers, and workers can easily condition their search on this information. Preferences were collected for all employers but only treated employers had their signal revealed to job-seekers. In response to revelation of the cheap talk signal, job-seekers targeted their applications to employers of the right “type, ” and they tailored their wage bids, affecting who was matched to whom and at what wage. The treatment increased measures of match quality through better sorting, illustrating the power of cheap talk for talent matching. |
| Date: | 2024–06–05 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2024013 |
| By: | Gokan, Toshitaka (Institute of Developing Economies); Kichko, Sergei (University of Trento); Matheson, Jesse A. (University of Sheffield); Thisse, Jacques-François (Université catholique de Louvain, LIDAM/CORE, Belgium) |
| Abstract: | Since 2020, London experienced a 400% increase in teleworking among skilled workers. We propose a model that studies the implications of teleworking on (i) the residential structure of cities, (ii) the wage structure between skilled and unskilled workers, and (iii) the provision of local service in central and residential areas. Increased teleworking reduces the willingness to pay for residential proximity to the city center, and thus induces the residential movement of skilled workers towards the suburbs. The magnitude of this structural change, and its effect on labor markets and skilled/unskilled wage inequality, depends on the desirability of local services available in central and residential areas. In a two-city extension, teleworking moves skilled workers from the productive (and expensive) city to the less productive city. This has implications for residential structure and individual welfare in both cities. We find empirical evidence on changes in housing prices, skilled wage premium, and location changes for local services businesses in England consistent with the model’s predictions. |
| Keywords: | Telecommuting ; working from home ; local labor markets ; local consumer services ; gentrified cities ; inter-city commuting |
| JEL: | J60 R00 |
| Date: | 2024–06–04 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2024010 |
| By: | Andrew C. Johnston |
| Abstract: | I examine teacher preferences using a discrete-choice experiment, which I link to administrative data on teacher effectiveness. I estimate willingness-to-pay for a rich set of compensation elements and working conditions. Highly effective teachers usually have the same preferences as their peers, but they have stronger preferences for performance pay. I use the preference estimates to investigate the optimal compensation structure for three key objectives: maximizing teacher utility, maximizing teacher retention, and maximizing student achievement. Under each objective, schools underutilize salary and performance pay, while overutilizing retirement benefits. Restructuring compensation can significantly improve both teacher welfare and student achievement. |
| JEL: | I20 J32 J45 M50 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33088 |
| By: | Lohmann, Paul M; Gsottbauer, Elisabeth; Farrington, James; Human, Steve; Reisch, Lucia A |
| Abstract: | Greenhouse gas emissions from the food system constitute about one-third of the global total, hence mitigation in this sphere of human activity is a vital goal for research and policy. This study empirically tests the effectiveness of different interventions to reduce the carbon footprint of food choices made on food-delivery apps, using an incentive-compatible online randomized controlled trial with 4, 008 participants. The experiment utilized an interactive web platform that mimics popular online food-delivery platforms (such as Just Eat) and included three treatment conditions: a sign-posted meat tax, a carbon-footprint label, and a choice-architecture intervention that changed the order of the menu so that the lowest carbon-impact restaurants and dishes were presented first. Results show that only the choice-architecture nudge significantly reduced the average meal carbon footprint—by 0.3 kg/CO2e per order (12%), driven by a 5.6 percentage point (13%) reduction in high-carbon meal choices. Moreover, we find evidence of significant health and well-being co-benefits. Menu repositioning resulted in the average meal order having greater nutritional value and fewer calories, whilst significantly increasing self-reported satisfaction with the meal choice. Simple back-of-the-envelope calculations suggest that menu repositioning would be a highly cost-effective policy instrument if implemented at scale, with the return on investment expected to be in the range of £1.28 to £3.85 per metric ton of avoided CO2 emissions, depending on implementation costs. |
| Keywords: | carbon-footprint labeling; choice architecture; food-delivery apps; low-carbon diets; repositioning |
| JEL: | L81 |
| Date: | 2024–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125835 |
| By: | Justin Valasek; Pauline Vorjohann; Weijia Wang; Justin Mattias Valasek |
| Abstract: | An influential subset of the literature on distributional preferences studies how preferences condition on information about workers’ characteristics, such as their relative productivity. In this study we confirm that there are default effects when such conditional fair-ness preferences are measured using the “inequality acceptance” method. Depending on the default, implemented inequality decreases by over 65% and cross-country differences are not observed. To organize the data, we develop a simple framework in which agents form a reference point based on a combination of their conditional distributional preferences and the default. We use this framework to illustrate that choice data from different defaults is needed to separately identify distributional preferences and default effects, and discuss best practices for measuring fairness preferences. |
| Keywords: | inequality, fairness, inequality acceptance, distributional preferences, default effects, experiment |
| JEL: | C91 D63 J16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11288 |
| By: | David K Levine |
| Date: | 2024–11–05 |
| URL: | https://d.repec.org/n?u=RePEc:cla:levarc:11694000000000208 |