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on Discrete Choice Models |
| By: | James Heckman (University of Chicago); John Eric Humphries (University of Chicago); Gregory Veramendi (Arizona State University); Sergio Urzua (University of Maryland) |
| Abstract: | This paper develops and estimates a model with multiple schooling choices that identifies the causal effect of different levels of schooling on health, health-related behaviors, and labor market outcomes. We develop an approach that is a halfway house between a reduced form treatment effect model and a fully formulated dynamic discrete choice model. It is computationally tractable and identifies the causal effects of educational choices at different margins. We estimate distributions of responses to education and find evidence for substantial heterogeneity in unobserved variables on which agents make choices. The estimated treatment effects of education are decomposed into the direct benefits of attaining a given level of schooling and indirect benefits from the option to continue on to further schooling. Continuation values are an important component of our estimated treatment effects. While the estimated causal effects of education are substantial for most outcomes, we also estimate a quantitatively important effect of unobservables on outcomes. Both cognitive and socioemotional factors contribute to shaping educational choices and labor market and health outcomes. We improve on LATE by identifying the groups affected by variations in the instruments. We find benefits of cognition on most outcomes apart from its effect on schooling attainment. The benefits of socioemotional skills on outcomes beyond their effects on schooling attainment are less precisely estimated. |
| Keywords: | education, early endowments, factor models, health, treatment effects |
| JEL: | C32 C38 I12 I14 I21 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2014-007&r=dcm |
| By: | Andersson, Henrik; Hole, Arne Risa; Svensson, Mikael |
| Abstract: | This study elicits individual preferences for reducing morbidity and mortality risk in the context of an infectious disease (campylobacter) using choice experiments. Respondents are in the survey asked to choose between different policies that, in addition to the two health risks, also vary with respect to source of disease being targeted (food or water), when the policy takes place (in time), and the monetary cost. Our results in our baseline model are in line with expectations; respondents prefer the benefits of the program sooner than later, programs that reduce both the mortality and morbidity risk, and less costly programs. Moreover, our results suggest that respondents prefer water- compared with food-safety programs. However, a main objective of this study is to examine scope sensitivity of mortality risk reductions using a novel approach. Our results from a split-sample design suggest that the value of the mortality risk reduction, defined as the value of a statistical life, is SEK 3 177 (USD 483 million) and SEK 50 million (USD 8 million), respectively, in our two sub-samples. This result cast doubt on the standard scope sensitivity tests in choice experiments, and the results also cast doubt on the validity and reliability of VSL estimates based on stated preference (and revealed preference) studies in general. This is important due to the large empirical literature on non-market evaluation and the elicited values’ central role in policy making, such as benefit-cost analysis. |
| Keywords: | Choice experiments; Morbidity risk; Mortality risk; Scope sensitivity; Willingness to pay |
| JEL: | D61 H41 I18 Q51 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:27900&r=dcm |
| By: | Maria Osipenko; Zhiwei Shen; Martin Odening; |
| Abstract: | In this paper we adapt a dynamic discrete choice model to examine the aggregated demand for single- and multi-year crop insurance contracts. We show that in a competitive insurance market with heterogeneous risk averse farmers, there is simultaneous demand for both insurance contracts. Moreover, the introduction of multi-year contracts enhances the market penetration of insurance products. Using U.S. corn yield data, we empirically assess the potential of multi-year crop insurance. |
| Keywords: | multi-year insurance, index-based crop insurance, dynamic discrete choice model |
| JEL: | D81 G22 Q14 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2014-025&r=dcm |
| By: | Massimo Baldini; Costanza Torricelli; Maria Cesira Urzì Brancati |
| Abstract: | In this paper we analyse household members’ reactions in case of unforeseen negative income shocks due to a transition into unemployment and/or into income support. More specifically, we estimate the impact of an income loss suffered by one household member on the probability that another household member – not necessarily the wife - transit from out of the labour force into employment or into workforce. Since in a lifecycle setting the labour supply of secondary workers is also affected by credit constraints, we take into account financial wealth and liabilities as well as a measure of household illiquidity due to housing. To perform our analyses, we use a discrete choice model and data drawn from the Bank of Italy Survey on Household Income and Wealth (SHIW) over the period 2004-2012, so as to include the effects of the Great Recession. Even after accounting for standard socio-economic controls, results show significant reactions to income shocks, especially during the recession. As for portfolio controls, we find a significant difference (mostly in terms of intercept, but also of slope) between the level of illiquidity and labour market participation for households hit/not hit by a shock. |
| Keywords: | household labour decisions, household portfolios, discrete-choice models |
| JEL: | D12 D14 J22 C25 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:mod:wcefin:14104&r=dcm |
| By: | Fischer, Anke; Hanley, Nicholas; Lowassa, Asanterabi; Milner-Gulland, EJ; Moro, Mirko; Naiman, Loiruck C |
| Abstract: | Illegal hunting for bushmeat is regarded as an important cause of biodiversity decline in Africa. We use a stated preferences method to obtain information on determinants of demand for bushmeat in villages around the Serengeti National Park, Tanzania. We estimate the effects of changes in the own price of bushmeat and in the prices of two substitute protein sources - fish and chicken. Promoting the availability of protein substitutes at lower prices would be effective at reducing pressures on wildlife. Supply-side measures that raise the price of bushmeat would also be e ffective. |
| Keywords: | Tanzania; alternative protein sources; price elasticity of demand; open-ended choice experiments; stated preferences; illegal bushmeat; conservatio n |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:stl:stledp:2014-07&r=dcm |
| By: | Renee Luthra (University of Essex); Lucinda Platt (London School of Economics); Justyna Salamońska (University of Chieti-Pescara) |
| Abstract: | The expansion of the European Union eastwards in 2004, with an ensuing massive increase in East-West migration from the accession countries has been represented as a new migration system of a kind unique in recent migration history, with its specific features of rights of movement and low mobility and information costs accompanying persistent East-West wage differentials. In principle, it provides an ideal context in which to develop understandings of the ‘new migration’ reflecting complex motivations and migration trajectories as well as chain migration and transnational lives. Despite a rapid expansion of research in this area, new insights into the complexities of mixed migration motivations and migrant heterogeneity have tended to be focused on country-specific qualitative studies. In this paper we utilise a unique, four-country data source covering over 3,500 Poles migrating to Germany, the Netherlands, London and Dublin in 2009-2010, to enable the quantitative characterization of the new migration. Exploiting information on pre-migration experience as well as expressed migration motivations and post-migration structural, subjective and social measures of integration in the receiving country, we conduct a three-stage analysis. First we employ latent class analysis to allocate the migrants to six migrant types. Second, we link these migrant types to pre-migration characteristics and estimate multinomial logit models for class membership. Third, controlling for these pre-migration characteristics we are able to explore how the migrant types are associated with measures of integration. We reveal substantial heterogeneity among migrants and some evolving ‘new’ migrant types alongside more traditional labour migrants. We show how these types are associated with differences in pre-migration human capital, region of origin and employment experience and with post-migration social and subjective integration in receiving societies. |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1412&r=dcm |