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on Discrete Choice Models |
| By: | Ilja Neustadt (Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich) |
| Abstract: | The sustainability of the welfare state ultimately depends on citizens’ preferences for income redistribution. They are elicited through a Discrete Choice Experiment performed in 2008 in Switzerland. Attributes are redistribution as GDP share, its uses (the unemployed, old-age pensioners, people with ill health etc.), and nationality of beneficiary. Estimated marginal willingness to pay (WTP) is positive among those who deem benefits too low, and negative otherwise. However, even those who state that government should reduce income inequality exhibit a negative WTP on average. The major finding is that estimated average WTP is maximum at 21% of GDP, clearly below the current value of 25%. Thus, the present Swiss welfare state does not appear sustainable. |
| Keywords: | Income redistribution, preferences, willingness to pay, welfare state, sustainability, discrete choice experiments, |
| JEL: | C35 C93 D63 H29 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:1003&r=dcm |
| By: | Rowena Pecchenino (Economics,Finance and Accounting,National University of Ireland, Maynooth); |
| Abstract: | We make choices to achieve an objective. The objective is defined by an individual’s preferences. Subject to constraints, the objective is approached or achieved. Is this a good characterization of life? To answer this question we weaken one of the most basic assumptions of economics: individuals know their preferences. Instead we assume that an individual’s preferences are shaped and reshaped by his environment, experiences, expectations, and by exogenous events. In this model of individual self-discovery, preferences emerge, evolve, and change. These redefinitions change the future course of the individual’s life and reinterpret his past. They characterize a life lived. |
| Keywords: | Identity, Preferences, Choice, Life |
| JEL: | D01 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n205-10.pdf&r=dcm |
| By: | Russell Cooper; John Haltiwanger; Jonathan L. Willis |
| Abstract: | This paper studies capital adjustment at the establishment level. Our goal is to characterize capital adjustment costs, which are important for understanding both the dynamics of aggregate investment and the impact of various policies on capital accumulation. Our estimation strategy searches for parameters that minimize ex post errors in an Euler equation. This strategy is quite common in models for which adjustment occurs in each period. Here, we extend that logic to the estimation of parameters of dynamic optimization problems in which non-convexities lead to extended periods of investment inactivity. In doing so, we create a method to take into account censored observations stemming from intermittent investment. This methodology allows us to take the structural model directly to the data, avoiding time-consuming simulation-based methods. To study the effectiveness of this methodology, we first undertake several Monte Carlo exercises using data generated by the structural model. We then estimate capital adjustment costs for U.S. manufacturing establishments in two sectors. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp10-04&r=dcm |