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on Discrete Choice Models |
| By: | Chao Wei (Department of Economics/Institute for International Economic Policy, George Washington University); Shanjun Li (Dyson School of Applied Economics and Management, Cornell University) |
| Abstract: | During the recent economic crisis, many countries have adopted stimulus programs designed to achieve two goals: to stimulate economic activity in lagging durable goods sectors and to protect or even enhance environmental quality. The environmental benefits are often viewed and much advocated as co-benefits of economic stimulus. This paper investigates the potential tradeoff between the stimulus and environmental objectives in the context of the popular U.S. Cash-for-Clunkers (CFC) program by developing and estimating a dynamic discrete choice model of vehicle ownership. Results from counterfactual analysis based on several specifcations all show that the design elements to achieve environmental benets significantly limit the program impact on demand stimulus: the cost of vehicle demand stimulus after netting out environmental benets can be up to 77 percent higher under the program than that from an alternative policy design without the design elements aimed at the environmental objective. |
| Keywords: | Stimulus, Dynamic Discrete Choice Model, Vehicle Scrappage |
| JEL: | E62 H23 H31 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:gwi:wpaper:2014-12&r=dcm |
| By: | Minxian Yang (School of Economics, Australian School of Business, the University of New South Wales) |
| Abstract: | The idea of identifying structural parameters via heteroskedasticity is explored in the context of binary choice models with an endogenous regressor. Sufficient conditions for parameter identification are derived for probit models without relying on instruments or additional restrictions. The results are extendable to other parametric binary choice models. The semi- parametric model of Manski (1975, 1985), with endogeneity, is also shown to be identifiable in the presence of heteroskedasticity. The role of heteroskedasticity in identifying and estimating structural parameters is demonstrated by Monte Carlo experiments. |
| Keywords: | Qualitative response, Probit, Logit, Linear median regression, Endogeneity, Identification, Heteroskedasticity |
| JEL: | C25 C35 C13 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2014-34&r=dcm |
| By: | Pablo Lavado (Universidad del Pacífico) |
| Abstract: | This paper develops a structural empirical model of contraception and participation choice under imperfect control of fertility, learning and unobserved heterogeneity to identify, estimate and give a behavioral content to the effect of the first born child on female labor supply. Family planning failures are exploited as sources of identification. The data are drawn from the 1995 US National Survey of Family Growth (NSFG) which no one has used before for this purpose and which contains full retrospective information on participation, contraception and children. The model is estimated combining the Nested Pseudo Likelihood Estimation and the Expected-Maximization algorithm. Key factors driving the importance of the effect are education, labor market experience, child's age and preferences for leisure and children. From a policy perspective, this heterogeneity is important in designing maternity leave and child care policies. Additionally, twins and gender composition of children are used as sources of variation in the model to estimate the effect of the second and the third born child. The Average Treatment Effect (ATE) of the first is -12.4%, of the second is -5.6% and of third born child is -4.9%. Finally, based on the dynamic model a weighting procedure is proposed to understand the Local Average Treatment Effects (LATE) found in the nonstructural literature. |
| Keywords: | Fertility, female labor supply, family planning failures, marginal treatment effects, average treatment effects, local average treatment effects, dynamic discrete choice models, conditional choice probability, unobserved heterogeneity. |
| JEL: | J13 J21 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2014_1405&r=dcm |
| By: | Lukasz GRZYBOWSKI; Frank VERBOVEN |
| Abstract: | We study substitution from fixed-line to mobile voice access, and the role of various complementarities that may influence this process. We use rich survey data on 160,363 households from 27 EU countries during 2005-2012. We estimate a discrete choice model where households may choose one or both technologies, possibly in combination with internet access. We obtain the following main findings. First, there is significant fixed-to mobile substitution, especially in recent years: without mobile telephony, fixed-line penetration would have been 14% higher in 2012. But there is substantial heterogeneity across households and EU regions, with a stronger substitution in Central and Eastern European countries. Second, the decline in fixed telephony has been slowed down because of a significant complementarity between fixed-line and mobile connections offered by the fixed-line incumbent operator. This gives the incumbent a possibility to maintain to some extent its position in the fixed-line market, and to leverage it into the mobile market. Third, the decline in fixed telephony has been slowed down because of the complementarity with broadband internet: the introduction of DSL avoided an additional decline in fixed-line penetration of almost 9% in 2012. The emergence of fixed broadband has thus been the main source through which incumbents maintain their strong position in the fixed-line network. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces14.12&r=dcm |
| By: | Maiya Anokhina (National Research University Higher School of Economics, Moscow); Henry Penikas (National Research University Higher School of Economics, Moscow); Victor Petrov (National Research University Higher School of Economics, Moscow) |
| Abstract: | The increased role of financial institutions in the economy leads to a need to determine those that are systemically important. The bankruptcy of such institutions creates negative effects for the economy on the global scale. The aim of this article is to identify important financial coefficients that can be used in the methodology of identification of G-SIB and G-SII. Models of binary choice and models of ordered choice are used in this article, several models are highly predictive. Besides this paper has revealed several financial coefficients, that helped to find the probabilities of G-SIF for Russian banks and insurance companies. |
| Keywords: | Systemic importance; Basel committee, probability of default, financial coefficients; models of ordered choice, models of binary choice, global systemically important banks (G-SIB), insurance company. |
| JEL: | C70 E58 G21 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:085&r=dcm |
| By: | LaRiviere, Jacob; Czajkowski, Mikolaj; Hanley, Nick; Aanesen, Margrethe; Falk-Peterson, Jannike; Tinch, Dugald |
| Abstract: | This paper compares how increases in experience versus increases in knowledge about a public good affect willingness to pay (WTP) for its provision. This is challenging because while consumers are often certain about their previous experiences with a good, they may be uncertain about the accuracy of their knowledge. We therefore design and conduct a field experiment in which treated subjects receive a precise and objective signal regarding their knowledge about a public good before estimating their WTP for it. Using data for two different public goods, we show qualitative equivalence of the effect of knowledge and experience on valuation for a public good. Surprisingly, though, we find that the causal effect of objective signals about the accuracy of a subject’s knowledge for a public good can dramatically affect their valuation for it: treatment causes an increase of $150-$200 in WTP for well-informed individuals. We find no such effect for less informed subjects. Our results imply that WTP estimates for public goods are not only a function of true information states of the respondents but beliefs about those information states. |
| Keywords: | Information, Beliefs, Field Experiment, Valuation, Uncertainty, Choice Experiment, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:552&r=dcm |
| By: | Anastasiya Redkina (National Research University Higher School of Economics) |
| Abstract: | This article is motivated by a growing interest in the problem of merger control quality assessment. Remedies are one of the instruments of merger control and have a significant influence on the results of it. This paper aims to build and empirically evaluate a discrete choice model of merger remedies implementation in Russian merger control. The database consists of 443 merger cases accepted by the Russian antimonopoly agency between 2008 and 2011. We analyse the agency’s decisions to find which characteristics of merging firms and markets lead the Federal Antimonopoly Service to decide whether to allow conditional acceptance. We find that variables related to high market power lead more frequently to a remedy outcome. Such industries as the energy sector, communications and insurance positively affect the probability of a structural remedy. We do not find significant effects of “non-structural” variables, such as the world leader and the nationality of the firm-buyer |
| Keywords: | merger control, behavioural and structural remedies, discrete choice models |
| JEL: | K21 L40 D78 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:62/ec/2014&r=dcm |
| By: | Koen DECLERCQ; Frank VERBOVEN |
| Abstract: | Many countries organize their higher education system with limited or no ex ante admission standards. They instead rely more heavily on an ex post selection mechanism, based on the students’ performance during higher education. We analyze how a system with ex post selection affects initial enrollment and final degree completion, using a rich dataset for Belgium (region of Flanders). We develop a dynamic discrete choice model of college/university and major choice, where the outcome of the enrollment decision is uncertain. Upon observing past performance, students may decide to continue, reorient to another major, or drop out. We find that ex post student selection is very strong: less than half of the students successfully complete their course work in the first year. Unsuccessful students mainly switch from university to college majors, or from college majors to drop-out. We use the estimates of our model to evaluate the effects of alternative, ex ante admission policies. We find that a suitably designed ex ante screening system (with moderate admission thresholds) can considerably increase degree completion in higher education. A discriminatory screening system for universities only, can raise total degree completion even more, though it implies a shift from university to college degrees. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces14.13&r=dcm |
| By: | Andrew Beauchamp (Boston College); Geoffrey Sanzenbacher (Boston College); Shannon Seitz (Analysis Group); Meghan Skira (University of Georgia) |
| Abstract: | Why do some men father children outside of marriage but not provide support? Why are some single women willing to have children outside of marriage when they receive little or no support from unmarried fathers? Why is this behavior especially common among blacks? To shed light on these questions, we develop and estimate a dynamic equilibrium model of marriage, employment, fertility, and child support. We consider the extent to which low earnings and a shortage of single men relative to single women among blacks can explain the prevalence of deadbeat dads and non-marital childbearing. We estimate the model by indirect inference using data from the National Longitudinal Survey of Youth 1979. We simulate three distinct counterfactual policy environments: perfect child support enforcement, eliminating the black-white earnings gap, and equalizing black-white population supplies (and therefore gender ratios). We nd perfect enforcement reduces non-marital childbearing dramatically, particularly among blacks; over time it translates into many fewer couples living with children from past relationships, and therefore less deadbeat fatherhood. Eliminating the black-white earnings gap reduces the marriage rate dierence between blacks and whites by 29 to 43 percent; black child poverty rates fall by nearly 40 percent. Finally equalizing gender ratios has little effect on racial differences in marriage and fertility. |
| Keywords: | Marriage, divorce, fertility, single motherhood, non-marital childbearing, employment, dynamic discrete choice, indirect inference |
| JEL: | C51 C61 D12 D13 J12 J13 J22 |
| Date: | 2014–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:859&r=dcm |
| By: | Czajkowski, Mikolaj; Hanley, Nick; LaRiviere, Jacob; Simpson, Katherine |
| Abstract: | In this study we elicit agents’ prior information set regarding a public good, exogenously give information treatments to survey respondents and subsequently elicit willingness to pay for the good and posterior information sets. The design of this field experiment allows us to perform theoretically motivated hypothesis testing between different updating rules: non-informative updating, Bayesian updating, and incomplete updating. We find causal evidence that agents imperfectly update their information sets. We also field causal evidence that the amount of additional information provided to subjects relative to their pre-existing information levels can affect stated WTP in ways consistent overload from too much learning. This result raises important (though familiar) issues for the use of stated preference methods in policy analysis. |
| Keywords: | Bayesian, Public Goods, Behavioral Economics, Stated Preference, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:553&r=dcm |
| By: | Sara Ramos (Faculty of Economics, University of Coimbra, Portugal); Elias Soukiazis (Faculty of Economics, University of Coimbra and GEMF, Portugal) |
| Abstract: | The Subjective Well-Being status has gained a growing research attention in social sciences during the last decades. The attention given by the academic world to this issue has been followed by the community in general. This line of research is still undeveloped in Portugal, and therefore needs further investigation. The purpose of this study is to analyze the determinants of Life Satisfaction and Happiness as proxies for Subjective Well-Being of the Portuguese citizens using micro-data from the European Quality of Life Survey. OLS regressions and Ordinal Logistic models are estimated to identify the main factors that explain well-being in Portugal. We find that trust in public institutions, satisfaction with material conditions, volunteering activities and employment status have a positive and significant effect on Life Satisfaction. Our evidence also shows that satisfaction with family, satisfaction with material conditions, participation in sport activities, optimism and the marital status are relevant factors in explaining citizen’s Happiness in Portugal. The results are similar using OLS or Maximum Likelihood estimation techniques on ordinal logistic models. |
| Keywords: | Happiness, Life Satisfaction, Subjective Well-Being, Ordinal Logit Models, Factor Analysis. |
| JEL: | C1 C25 M14 I31 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:wpaper:2014-16.&r=dcm |