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on Discrete Choice Models |
| By: | David McKenzie (Development Research Group, World Bank); Hillel Rapoport (Department of Economics, Bar-Ilan University, CADRE, University of Lille II, and Stanford Center for International Development) |
| Abstract: | This paper examines the impact of migration on educational attainments in rural Mexico. Using historical migration rates by state to instrument for current migration, we find evidence of a significant negative effect of migration on schooling attendance and attainments of 12 to 18 year-old boys and of 16 to 18 year-old girls. IV-Censored Ordered Probit results show that living in a migrant household lowers the chances of boys completing junior high-school and of boys and girls completing high-school. The negative effect of migration on schooling is somewhat mitigated for younger girls with low educated mothers, which is consistent with remittances relaxing credit constraints on education investment for the very poor. However, for the majority of rural Mexican children, family migration depresses educational attainment. Comparison of the marginal effects of migration on school attendance and on participation to other activities shows that the observed decrease in schooling of 16 to 18 year olds is accounted for by current migration of boys and increases in housework for girls. |
| Keywords: | Migration, migrant networks, education attainments, Mexico |
| JEL: | O15 J61 D31 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:0601&r=dcm |
| By: | Christian Belzil (GATE - Groupe d'analyse et de théorie économique - [CNRS : UMR5824] - [Université Lumière - Lyon II] - [Ecole Normale Supérieure Lettres et Sciences Humaines], IZA - Institute for the study of labor - [IZA][Institute for the study of labor]); Marco Leonardi (IZA - Institute for the study of labor - [IZA][Institute for the study of labor], Università degli studi di Milano - [Università di Milano][Università degli studi di Milano]) |
| Abstract: | Using unique Italian panel data, in which individual differences in behavior toward risk are measured from answers to a lottery question, we investigate if (and to what extent) risk aversion can explain differences in schooling attainments. We formulate the schooling decision process as a reduced-form dynamic discrete choice. The model is estimated with a degree of flexibility virtually compatible with semiparametric likelihood techniques. We analyze how grade transition from one level to the next varies with preference heterogeneity (risk aversion), parental human capital, socioeconomic variables and persistent unobserved (to the econometrician) heterogeneity. We present evidence that schooling attainments decrease with risk aversion, but despite a statistically significant effect, differences in attitudes toward risk account for a modest portion of the probability of entering higher education. Differences in ability(ies) and in parental human capital are much more important. in the most general version of the model, the likelihood function is the joint probability of schooling attainments, and post-schooling wealth and risk aversion. |
| Keywords: | dynamic discrete choices ; education ; human capital ; risk aversion |
| Date: | 2007–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00142551_v1&r=dcm |
| By: | Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Svedsäter, Henrik (Department of Psychology, Göteborg University) |
| Abstract: | A choice experiment eliciting environmental values is set up in order to test for hypothetical bias based on both within and between sample designs. A larger hypothetical bias was found in the latter case, which explains parts of the previous diverging results in the literature. People seem to prefer to do what they say they would do.<p> |
| Keywords: | Stated-preference methods; choice experiment; hypothetical bias; internal consistency; non-market valuation; |
| JEL: | C91 Q28 |
| Date: | 2007–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0252&r=dcm |
| By: | Anna Conte; John D Hey; Peter G Moffatt |
| Abstract: | This paper is concerned with estimating preference functionals for choice under risk from the choice behaviour of individuals. We start from the observation that there is heterogeneity in behaviour between individuals and within individuals. By ‘heterogeneity between individuals’ we mean that people are different, not only in terms of which type of preference functional that they have, but also in terms of their parameters for these functionals. By ‘heterogeneity within individuals’ we mean that behaviour may be different even by the same individual for the same choice problem. Given the heterogeneity between individuals, the assumption of a ‘representative agent’ preference functional to represent the preference functional of all individuals may well lead to biased estimates. Given the heterogeneity within individuals, we should think carefully about the source of this heterogeneity and model it appropriately, for otherwise we get biased estimates. We propose solutions to both of these problems, concentrating particularly, but not exclusively, on using a Mixture Model to capture the heterogeneity of preference functionals across individuals. |
| Keywords: | errors, expected utility theory, experimental economics, maximum simulated likelihood, mixture models, preference functionals, risky choice, rank dependent expected utility theory, unobserved heterogeneity |
| JEL: | C15 C29 C51 C87 C91 D81 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:07/06&r=dcm |
| By: | Gomes, Orlando |
| Abstract: | Recent literature has been able to include into standard optimal growth models some hypotheses that allow for the generation of endogenous long run fluctuations. This paper contributes to this endogenous business cycles literature by considering social interactions. In the proposed model, individuals can choose, under a discrete choice rule, to which social group they prefer to belong to. This selection process is constrained essentially by the dimension of the group, which is the main determinant regarding the utility individuals withdraw from social interaction. The proposed setup implies the presence of cycles and chaotic motion describing the evolution of group dimension over time. Because being member of a group involves costs to households, the inclusion of these costs in a standard Ramsey growth model will imply that endogenous cycles might arise in the time trajectory of the growth rate of output. |
| Keywords: | Social interaction; Business cycles; Growth models; Nonlinear dynamics and Chaos; Discrete choice. |
| JEL: | C61 Z13 E32 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2848&r=dcm |
| By: | Gomes, Orlando |
| Abstract: | The standard two-sector growth model with physical and human capital characterizes a process of material accumulation involving simple dynamics; constant long run growth is observable when assuming conventional Cobb-Douglas production functions in both sectors. This framework is developed under a central planner scenario: it is a representative agent that chooses between consumption and capital accumulation, on one hand, and between allocating human capital to each one of the two sectors, on the other. We concentrate in this second choice and we argue that the outcome of the aggregate model is incompatible with a scenario where individual agents, acting in a market economy, are free to decide, in each time moment, how to allocate their human capital in order to produce goods or to create additional skills. Combining individual incentives, the effort of a central planner (i.e., government) to approximate the decentralized outcome to the optimal result and a discrete choice rule that governs the decisions of individual agents, we propose a growth framework able to generate a significant variety of long term dynamic results, including endogenous fluctuations. |
| Keywords: | Endogenous growth; Human capital; Endogenous business cycles; Discrete choice; Nonlinear dynamics; Chaos. |
| JEL: | C61 O41 E32 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2882&r=dcm |
| By: | Geeta Kingdon; John Knight (Department of Economics, University of Oxford) |
| Abstract: | Abstract: Using a South African data set, the paper poses six questions about the determinants of subjective well-being. Much of the paper is concerned with the role of relative concepts. We find that comparator income – measured as average income of others in the local residential cluster – enters the household’s utility function positively but that income of more distant others (others in the district or province) enters negatively. The ordered probit equations indicate that, as well as comparator groups based on spatial proximity, race-based comparator groups are important in the racially divided South African society. It is also found that relative income is more important to happiness at higher levels of absolute income. Potential explanations of these results, and their implications, are considered. |
| Keywords: | South Africa: poverty, well-being, absolute income, household’s utility function |
| JEL: | A1 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:ctw:wpaper:9628&r=dcm |