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on Discrete Choice Models |
| By: | Marija Bockarjova (VU University Amsterdam); Piet Rietveld (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam) |
| Abstract: | In this paper we use data from an SP study on flood safety in the Netherlands, and elicit individual preferences for reduction of risk to life and limb. We perform context analysis to test the robustness of fatality risk valuation throughout choice experiments. The main interest of this paper is VOSL sensitivity to the valuation of correlated risks (scope effect). Besides, we explore the role of cognition on the stability of valuation across choice experiments using age and education. We pool data from multiple choice experiments and apply nested and mixed logit models in our analysis. We confirm statistically significant sensitivity to scope, comparing VOSL estimates for the test group in a choice experiment where correlated risks were present (risks of fatality, injury and evacuation) to an experiment where only fatality risk is valued. We find that the origin of differences in VOSL valuations across the choice experiments lies in differences in age and educational attainment, and may therefore be related to cognitive abilities of respondents. In particular, we conclude that higher VOSL sensitivity to scope is most prominently present among respondents of senior age (65 and older) and respondents without college education. This finding has important implications for discrete choice modeling and the use of obtained values in cost-benefit analyses. |
| Keywords: | stated preferences, value of statistical life, value of statistical injury, value of statistical evacuation, flood risk |
| JEL: | C01 C33 C83 C90 D12 D61 Q51 Q54 |
| Date: | 2012–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012046&r=dcm |
| By: | Marija Bockarjova (VU University Amsterdam); Piet Rietveld (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam) |
| Abstract: | This paper enriches existing valuation literature in a number of ways by presenting context-specific estimates of immaterial damage. First, it offers an estimation of value of statistical life (VOSL) in the context of a natural hazard (flooding). Next, as one of the contributions, alongside with less biased estimate of VOSL (euro 6.8 mln) it also provides estimates of the value of statistical injury (VOSI, euro 92,000), and of the value of statistical evacuation (VOSE, euro 2,400). Our estimated indicators are plausible and stay robust throughout various estimations. For flood protection policy in the Netherlands, a higher value of VOSL forthcoming from this research would imply 'underprotection' under current conditions. Another important finding concerns the composition of the total value of immaterial damages, where value of fatalities or value of evacuation may dominate depending on the prevailing floor risk circumstances. This implies that, first, VOSL is not an adequate proxy for immaterial damages since it understates prospective benefits of designated protective measures. Second, spatially differentiated composition of immaterial damages should be explicitly considered to guide policy decisions. |
| Keywords: | cost-benefit analysis, natural hazard, flood risk, stated preferences, choice experiment |
| JEL: | C01 C33 C83 C90 D12 D61 Q51 Q54 |
| Date: | 2012–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012047&r=dcm |
| By: | Sonia Akter; Jeff Bennett; Michael B. Ward |
| Abstract: | Public scepticism surrounding climate change is an obstacle for implementing climate change mitigation measures in many countries. However, very little is known about: (1) the nature and sources of climate change scepticism; and (2) its influence on preferences for climate change mitigation policies. In this paper, we investigate these two issues using evidence and analysis from an Australian public survey and choice experiment. The study has three key findings. First, the intensity of scepticism varies depending on its type; we observed little scepticism over the cause, trend and impact of climate change and widespread scepticism over the effectiveness of mitigation measures and global co-operation. Second, cause and mitigation scepticism play significant roles in determining public support for climate change abatement. Respondents who believed in human-induced climate change were significantly more supportive of mitigation. Likewise, respondents who believed that mitigation would be successful in slowing down climate change were significantly more likely to be supportive. Third, the general public tend to give the benefit of the doubt to supporting mitigation. Those who expressed higher uncertainty about climate outcomes were more supportive of mitigation than others with similar expectations but lower uncertainty. |
| Keywords: | Climate change; Emissions trading scheme; Scepticism; Mitigation; Public opinion; Choice experiment; Australia |
| JEL: | Q54 Q51 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:archive-47&r=dcm |
| By: | Martijn Kobus (VU University Amsterdam); Eva Gutierrez Puigarnau (VU University Amsterdam); Piet Rietveld (VU University Amsterdam); Jos Van Ommeren (VU University Amsterdam) |
| Abstract: | We introduce a methodology to estimate the effect of parking prices on car drivers' choice between street and garage parking. Our key identifying assumption is that the marginal benefit of parking duration does not depend on this choice. The endogeneity of parking duration is acknowledged in the estimation procedure. We apply the methodology to an area where cruising for parking is absent, street parking is ubiquitous and garage parking is discretely located over space. So, in this area, the average distance to the final destination is longer for garage parking than for street parking. We find that drivers are willing to pay a premium for street parking which ranges from euro 0.35 to euro 0.58. Given a parking duration of one hour, we find that the demand for street parking is extremely price elastic: the price elasticity of demand for the share of street parking is -4. However, the price elasticity is much smaller for shorter parking durations. Our estimates imply that even small reductions in street parking prices induce a strong increase in the stock of cars parked on-street. Our estimates also imply that a policy which contains an on-street premium (so street prices exceed garage prices) is welfare improving, because drivers with longer parking durations are induced to use parking locations that are, on average, farther away. |
| Keywords: | street parking; garage parking |
| JEL: | R48 |
| Date: | 2012–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:2012040&r=dcm |
| By: | Abeler, Johannes (University of Oxford); Nosenzo, Daniele (University of Nottingham) |
| Abstract: | Laboratory experiments have become a wide-spread tool in economic research. Yet, there is still doubt about how well the results from lab experiments generalize to other settings. In this paper, we investigate the self-selection process of potential subjects into the subject pool. We alter the recruitment email sent to first-year students, either mentioning the monetary reward associated with participation in experiments; or appealing to the importance of helping research; or both. We find that the sign-up rate drops by two-thirds if we do not mention monetary rewards. Appealing to subjects' willingness to help research has no effect on sign-up. We then invite the so-recruited subjects to the laboratory to measure a range of preferences in incentivized experiments. We do not find any differences between the three groups. Our results show that student subjects participate in experiments foremost to earn money, and that it is therefore unlikely that this selection leads to an over-estimation of social preferences in the student population. |
| Keywords: | methodology, selection bias, laboratory experiment, field experiment, other-regarding behavior, social preferences, social approval, experimenter demand |
| JEL: | C90 D03 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7374&r=dcm |