nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2024‒05‒20
fifteen papers chosen by
Edoardo Marcucci, Università degli studi Roma Tre

  1. There and Back Again: Women's Marginal Commuting Costs By Bergemann, Annette; Brunow, Stephan; Stockton, Isabel
  2. Two-step Estimation of Network Formation Models with Unobserved Heterogeneities and Strategic Interactions By Shaomin Wu
  3. Preferences for Policies from the Perspectives of Different Generations: Evidence from a Stated Choice Experiment in Japan By Yoichiro Tsuji; Junyi Shen
  4. Matching to Suppliers in the Production Network: an Empirical Framework By Alonso Alfaro-Urena; Paolo Zacchia
  5. Are parents an obstacle to gender-atypical occupational choices? By Stefan C. Wolter; Thea Zoellner
  6. Preference reversals in judgment and choice By Selart, Marcus
  7. Fast and simple inner-loop algorithms of static / dynamic BLP estimations By Takeshi Fukasawa
  8. Temporary migration decisions and effects on household income and diets in rural Bangladesh By Rana, Sohel; Faye, Amy; Qaim, Matin
  9. Effects of mental accounting on intertemporal choice By Karlsson, Niklas; Garling, Tommy; Selart, Marcus
  10. Access to charging infrastructure and the propensity to buy an electric car By Kristoffersson, Ida; Pyddoke, Roger; Kristofersson, Filip; Algers, Staffan
  11. Cultural and Creative Employment Across Italian Regions By Leogrande, Angelo
  12. The Social Meaning of Mobile Money: Earmarking Reduces the Willingness to Spend in Migrant Households By Jean N. Lee; Jonathan Morduch; Saravana Ravindran; Abu S. Shonchoy
  13. Preferences of Small-Scale Gold Miners related to Formalization: first steps toward sustainable mining supply chains in Colombia By Velez, Maria; Rueda, Ximena; Henao, Juan Pablo; Monroy, Dayron; Tobin, Danny; Maldonado, Jorge Higinio; Pfaff, Alexander
  14. Belief Bias Identification By Pedro Gonzalez-Fernandez
  15. Optimization of the Generalized Covariance Estimator in Noncausal Processes By Gianluca Cubadda; Francesco Giancaterini; Alain Hecq; Joann Jasiak

  1. By: Bergemann, Annette (University of Groningen); Brunow, Stephan; Stockton, Isabel (Institute for Fiscal Studies, London)
    Abstract: We estimate female and male workers' marginal willingness to pay to reduce commuting distance in Germany, using a partial-equilibrium model of job search with non-wage job attributes. Commuting costs have implications not just for congestion policy, spatial planning and transport infrastructure provision, but are also relevant to our understanding of gender differences in labour market biographies. For estimation, we use a stratified partial likelihood model on a large administrative dataset for West Germany to flexibly account for both unobserved individual heterogeneity and changes dependent on wages and children. We find that an average female childless worker is willing to give up daily €0.27 per kilometre (0.4% of the daily wage) to reduce commuting distance at the margin. The average men's marginal willingness to pay is similar to childless women's over a large range of wages. However, women's marginal willingness to pay more than doubles after the birth of a child contributing substantially to the motherhood wage gap. A married mixed-sex couple's sample indicates that husbands try to avoid commuting shorter distances than their wives.
    Keywords: commuting, marginal willingness to pay for job attributes, on-the-job search, Cox relative risk model, partial likelihood estimation, gender and parenthood in job search models, heterogeneity in job mobility, gender wage gap
    JEL: C41 J13 J16 J31 J62
    Date: 2024–03
  2. By: Shaomin Wu
    Abstract: In this paper, I characterize the network formation process as a static game of incomplete information, where the latent payoff of forming a link between two individuals depends on the structure of the network, as well as private information on agents' attributes. I allow agents' private unobserved attributes to be correlated with observed attributes through individual fixed effects. Using data from a single large network, I propose a two-step estimator for the model primitives. In the first step, I estimate agents' equilibrium beliefs of other people's choice probabilities. In the second step, I plug in the first-step estimator to the conditional choice probability expression and estimate the model parameters and the unobserved individual fixed effects together using Joint MLE. Assuming that the observed attributes are discrete, I showed that the first step estimator is uniformly consistent with rate $N^{-1/4}$, where $N$ is the total number of linking proposals. I also show that the second-step estimator converges asymptotically to a normal distribution at the same rate.
    Date: 2024–04
  3. By: Yoichiro Tsuji (Graduate School of Economics, Kobe University, JAPAN); Junyi Shen (Research Institute of Economics and Business Administration, Kobe University, JAPAN)
    Abstract: Although policy choices can impact not only the present but future generations, only the present generation can make such choices. If a policy imposes a burden on future generations, will the present generation consider the policy's impact on future generations when making a choice? In response to this intergenerational social dilemma, numerous empirical studies have shown that when asked to imagine themselves as a future generation, the present generation's participation in resource distribution decision-making is significantly impacted for decisions that consider future generations; moreover, local governments in Japan have made efforts that use this methodology as a social practice (Saijo, 2022). In this study, we aim to clarify what is needed for future generations to be considered by analyzing the respondents' policy preferences using an online stated choice experiment survey. The respondents were assigned different generational standpoints and were asked to choose their favorite of three policy packages, each of which comprised several policies. The results show that, in general, respondents tended to avoid placing direct burdens on the present generation, regardless of the generation they represented. However, respondents who took their children and grandchildren's standpoints tended to prefer policies that would not burden future generations. In addition, respondents with prosocial tendencies made choices that focused on future generations.
    Keywords: Generational standpoint; Policy preferences; Stated choice experiment; Present generation; Future generation
    JEL: C25 D64 H50
    Date: 2024–04
  4. By: Alonso Alfaro-Urena; Paolo Zacchia
    Abstract: This paper develops a framework for the empirical analysis of the determinants of input supplier choice on the extensive margin using firm-to-firm transaction data. Building on a theoretical model of production network formation, we characterize the assumptions that enable a transformation of the multinomial logit likelihood function from which the seller fixed effects, which encode the seller marginal costs, vanish. This transformation conditions, for each subnetwork restricted to one supplier industry, on the out-degree of sellers (a sufficient statistic for the seller fixed effect) and the in-degree of buyers (which is pinned down by technology and by “make-or-buy” decisions). This approach delivers a consistent estimator for the effect of dyadic explanatory variables, which in our model are interpreted as matching frictions, on the supplier choice probability. The estimator is easy to implement and in Monte Carlo simulations it outperforms alternatives based on group fixed effects. In an empirical application about the effect of a major Costa Rican infrastructural project on firm-to-firm connections, our approach yields estimates typically much smaller in magnitude than those from naive multinomial logit.
    Keywords: Production network, Supplier choice, Conditional logit, Infrastructures
    JEL: C25 L11 R12 R15
    Date: 2024–03
  5. By: Stefan C. Wolter; Thea Zoellner
    Abstract: Despite numerous measures intended to enhance gender equality, gender-specific study and career choices remain a persistent concern for policymakers and academics globally. We contribute to the literature on gendered career choices by focusing on explicitly stated parental preferences for their children's occupations, using a large-scale randomized survey experiment with adults (N=5940) in Switzerland. The focus on parents (and hypothetical parents) is motivated by the observation that adolescents consistently mention their parents as the single most important factor influencing their career choices. The surveyed adults are presented with a realistic choice situation, in which their hypothetical daughter or son has been proposed two different training occupations. The pair of occupations presented to the adults is drawn from a random sample of 105 pairs of occupations, and the respondents are not informed about the gender distribution of the two occupations. Results show that adults are gender-neutral when advising a daughter but have a pronounced preference for male- dominated occupations when advising sons. Preferences are almost identical for parents and non-parents and across age cohorts of adults.
    Keywords: Gender, Occupational choice, Career advice, Vocational Education
    JEL: J24 J16
    Date: 2024–04
  6. By: Selart, Marcus
    Abstract: According to normative decision theory there exists a principle of procedure invariance which states that a decision maker's preference order should remain the same, independently of which response mode is used. For example, the decision maker should express the same preference independently of whether he or she has to judge or decide. Nevertheless, previous research in behavioral decision making has suggested that judgments and choices yield different preference orders in both the risky and the riskless domain. In the latter, the prominence effect has been demonstrated. The main purpose of the present series of experiments was to test cognitive explanations which account for the prominence effect. One of the explanations provided a psychological account based primarily on decision-strategy compatibility. Two other explanations built on information structuring approaches. In the first one, the general idea was that decision makers differentiate between alternatives by value and belief restructuring. In the second approach, violations of invariance were assumed to be attributed to the information structure of the task which in many cases demand problem simplification. A prominence effect was in most experiments found for both choices and preference ratings. This finding spoke against the strategy compatibility explanation. Instead, the different forms of cognitive restructuring provided a better account. However, none of these provided a single explanation. Yet, the structure compatibility explanation appeared to be the more viable one, in particular of the relation between experimental manipulations and response mode outcomes. The predictions of the value-belief restructuring explanation, on the other hand, seemed to be more valid for the prominence effect found in choice than for preference ratings.
    Date: 2024–04–12
  7. By: Takeshi Fukasawa
    Abstract: This study investigates computationally efficient inner-loop algorithms for estimating static / dynamic BLP models. It provides the following ideas to reduce the number of inner-loop iterations: (1). Add a term concerning the outside option share in the BLP contraction mapping; (2). Analytically represent mean product utilities as a function of value functions and solve for the value functions (for dynamic BLP); (3-1). Combine the spectral / SQUAREM algorithms; (3-2). Choice of the step sizes. These methods are independent and easy to implement. This study shows good performance of these ideas by numerical experiments.
    Date: 2024–04
  8. By: Rana, Sohel; Faye, Amy; Qaim, Matin
    Abstract: Temporary migration is a widely observed phenomenon among poor rural households, mostly related to agricultural seasonality. However, household preferences for temporary migration in comparison to longer-term migration, and the differential effects of these migrations on household livelihoods are not yet well understood. Here, we use survey data collected in northern rural Bangladesh to analyze determinants of households’ choice between temporary and longer-term migration, and their comparative effects on various livelihood indicators, with a particular focus on agricultural lean periods. Issues of selection bias and endogeneity are addressed with Heckman selection models and instrumental variables. We show that temporary migration is more common than longer-term migration, partly determined by family demographic and farm-labor constraints. Although longer-term migration has larger positive effects on household income, temporary migration has larger positive effects on food consumption and dietary quality during lean periods. These results suggest that temporary migration is an important mechanism for the rural poor to smooth consumption and deserves more attention by researchers and policy-makers.
    Keywords: Agricultural and Food Policy, Food Security and Poverty, Labor and Human Capital
    Date: 2024–05–08
  9. By: Karlsson, Niklas; Garling, Tommy; Selart, Marcus
    Abstract: Two experiments with undergraduates as subjects were carried out with the aim of replicating and extending previous results showing that the implication of the behavioral life-cycle hypothesis (H. M. Shefrin & R. H. Thaler, 1988) that people classify assets in different mental accounts (current income, current assets, and future income) may explain how consumption choices are influenced by temporary income changes. In both experiments subjects made fictitious choices between paying for a good in cash or according to a more expensive installment plan after they had received an income which was either less, the same, or larger than usual. In Experiment 1 subjects were supposed to have savings so that the total assets were equal, whereas in Experiment 2 the total assets varied. The results of both experiments supported the role of mental accounts in demonstrating that subjects were unwilling to pay in cash after an income decrease even though they had access to saved money. Thus, in effect they chose to pay more for the good than they had to. Indicating a need for further refinement of the concept of mental account, choices to pay in cash after an income decrease tended to be more frequent when the consumption and savings motives were compatible than when they were incompatible. Furthermore, increasing the total assets made subjects more willing to pay in cash after an income decrease.
    Date: 2024–04–12
  10. By: Kristoffersson, Ida (Swedish National Road and Transport Research Institute (VTI)); Pyddoke, Roger (Swedish National Road and Transport Research Institute (VTI)); Kristofersson, Filip (Swedish National Road and Transport Research Institute (VTI)); Algers, Staffan (TPmod)
    Abstract: The policies for supplying charging infrastructure will be an important issue for the accel-eration of electrification of cars. In Sweden most early adopters of chargeable vehicles have been residents in detached houses. Residents in apartment buildings will be more dependent on public charging. This paper therefore examines how access to public charg-ing can affect the probability of buyers of new cars to choose a chargeable car. The main results indicate that the density of public charging stations close to home and work has a small but significant effect for buyers of private cars, as well as for buyers of other com-pany cars. We cannot however show any effect for the acquisition of Benefit In-Kind (BIK) company cars, but this could be due to incomplete data on charging access at the workplace. The socio-economic control variables are household income, having more than one car in the household, residence in a detached house, and that the owners of the apart-ment building received a grant for installing charging infrastructure close to the apartment building. These variables all have strong effects in the model. In the models of company cars, type of industry has strong effects for some industries.
    Keywords: Car type choice; Discrete choice modelling; Electric vehicle adoption; Electrification and decarbonization of transport; Revealed preference; Charging infrastructure
    JEL: H54 R42
    Date: 2024–04–29
  11. By: Leogrande, Angelo
    Abstract: in the following article I analyze the trend of cultural and creative employment in the Italian regions between 2004 and 2022 through the use of ISTAT-BES data. After presenting a static analysis, I also present the results of the clustering analysis aimed at identifying groupings between Italian regions. Subsequently, an econometric model is proposed for estimating the value of cultural and creative employment in the Italian regions. Finally, I compare various machine learning models for predicting the value of cultural and creative employment. The results are critically discussed through an economic policy analysis.
    Date: 2024–04–01
  12. By: Jean N. Lee (World Bank); Jonathan Morduch (Robert F. Wagner Graduate School of Public Service, New York University); Saravana Ravindran (Lee Kuan Yew School of Public Policy, National University of Singapore); Abu S. Shonchoy (Department of Economics, Florida International University)
    Abstract: Behavioral household finance shows that people are often more willing to spend when using less tangible forms of money like debit cards or digital payments than when spending in cash. We show that this “payment effect†cannot be generalized to mobile money. We surveyed families in rural Northwest Bangladesh, where mobile money is mainly received from relatives working in factories. The surveys were embedded within an experiment that allows us to control for the relationships between senders and receivers of mobile money. The finding suggests that the source of funds matters, and mobile money is earmarked for particular purposes and thus less fungible than cash. In contrast to the expectation of greater spending, the willingness to spend in the rural sample was lower by 24 to 31 percent. In urban areas, where the sample does not receive remittances on net, there are no payment effects associated with mobile money.
    Keywords: payment effect, digital finance, willingness to pay, social meaning of money, earmarks
    JEL: O15 G41 G50 D91 D14
    Date: 2024–04
  13. By: Velez, Maria (Los Andes University); Rueda, Ximena (University of Los Andes); Henao, Juan Pablo (Chair group of Agricultural Production and Resource Economics, Technical Un); Monroy, Dayron (Los Andes University); Tobin, Danny (Duke University); Maldonado, Jorge Higinio (Universidad de los Andes); Pfaff, Alexander (Duke University)
    Abstract: Artisanal and small-scale gold mining employs millions of poor people, globally, yet also significantly degrades the environment. Support from conscientious buyers, based on the information within certifications, could lower environmental impacts and raise incomes, leading miners to be willing to incur costs to participate in sustainable supply chains. As supply-chain certification may require formalization, we explore miners’ motivations for and the barriers to formalization within a choice experiment in two Community Councils in Afro-descendent areas of Colombia’s Pacific Region: Yurumangui, in Valle del Cauca and San Juan, in Choco. Community Councils have collective land rights—which might make them more willing to engage in collective action often required for formalization. We find that, while all miners prefer to leave the status quo, views of miners in the two Councils differed with regard to formalization. Yurumangui expressed more interest overall in the options we offered, perhaps due to past formalization experiences in San Juan. Yurumangui miners were also more willing to form or join an association to formalize, very likely due to positive past outcomes from organization. We find no consistent effect of gender regarding preferences, though prior voluntary restoration correlates with individual miners’ willingness to restore sites, one requisite of formalization. Our results inform interventions to support formalization in small-scale gold mining communities, as we find miners are willing to try formalization but raise issues related to costs that can hinder adoption and in ways that vary with the past legacies of each Council.
    Keywords: sustainability; supply chains; mercury; mining; Afro-descendant communities; formalization; common property resources; motivations; choice experiment; Colombia
    JEL: C25 D04 D71 Q31 Q32 Q38
    Date: 2024–03–25
  14. By: Pedro Gonzalez-Fernandez
    Abstract: This paper proposes a unified theoretical model to identify and test a comprehensive set of probabilistic updating biases within a single framework. The model achieves separate identification by focusing on the updating of belief distributions, rather than classic point-belief measurements. Testing the model in a laboratory experiment reveals significant heterogeneity at the individual level: All tested biases are present, and each participant exhibits at least one identifiable bias. Notably, motivated-belief biases (optimism and pessimism) and sequence-related biases (gambler's fallacy and hot hand fallacy) are identified as key drivers of biased inference. Moreover, at the population level, base rate neglect emerges as a persistent influence. This study contributes to the belief-updating literature by providing a methodological toolkit for researchers examining links between different conflicting biases, or exploring connections between updating biases and other behavioural phenomena.
    Date: 2024–04
  15. By: Gianluca Cubadda (CEIS & DEF, University of Rome "Tor Vergata"); Francesco Giancaterini (CEIS, University of Rome "Tor Vergata"); Alain Hecq (Maastricht University); Joann Jasiak (York University, Canada)
    Abstract: This paper investigates the performance of routinely used optimization algorithms in application to the Generalized Covariance estimator (GCov) for univariate and multivariate mixed causal and noncausal models. The GCov is a semi-parametric estimator with an objective function based on nonlinear autocovariances to identify causal and noncausal orders. When the number and type of nonlinear autocovariances included in the objective function are insufficient/inadequate, or the error density is too close to the Gaussian, identification issues can arise. These issues result in local minima in the objective function, which correspond to parameter values associated with incorrect causal and noncausal orders. Then, depending on the starting point and the optimization algorithm employed, the algorithm can converge to a local minimum. The paper proposes the Simulated Annealing (SA) optimization algorithm as an alternative to conventional numerical optimization methods. The results demonstrate that SA performs well in its application to mixed causal and noncausal models, successfully eliminating the effects of local minima. The proposed approach is illustrated by an empirical study of a bivariate series of commodity prices.
    Keywords: Mixed causal and noncausal models, Generalized covariance estimator, Simulated Annealing, Optimization, Commodity prices
    Date: 2024–04–23

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