|
on Discrete Choice Models |
| By: | John C. Whitehead; Daniel K. Lew |
| Abstract: | We develop econometric models to jointly estimate revealed preference (RP) and stated preference (SP) models of recreational fishing behavior and preferences using survey data from the 2007 Alaska Saltwater Sportfishing Economic Survey. The RP data are from site choice survey questions, and the SP data are from a discrete choice experiment. Random utility models using only the RP data may be more likely to estimate the effect of cost on site selection well, but catch per day estimates may not reflect the benefits of the trip as perceived by anglers. The SP models may be more likely to estimate the effects of trip characteristics well, but less attention may be paid to the cost variable due to the hypothetical nature of the SP questions. The combination and joint estimation of RP and SP data seeks to exploit the contrasting strengths of both. We find that there are significant gains in econometric efficiency, and differences between RP and SP willingness to pay estimates are mitigated by joint estimation. We compare a number of models that have appeared in the environmental economics literature with the generalized multinomial logit model. The nested logit “trick” model fails to account for the panel nature of the data and is less preferred to the mixed logit error components model that accounts for panel data and scale differences. Naïve (1) scaled, (2) mixed logit, and (3) generalized multinomial logit models produced similar results to a generalized multinomial logit model that accounts for scale differences in RP and SP data. Willingness to pay estimates do not differ across these models but are greater than those in the mixed logit error components model. Key Words: discrete choice experiment, generalized multinomial logit model, hypothetical bias, revealed preference, stated preference, travel cost method |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:16-22&r=dcm |
| By: | Enni Ruokamo (Finnish Environment Institute (SYKE); Department of Economics); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Nick Hanley (Department of Geography and Sustainable Development, University of St Andrews); Artti Juutinen (Department of Economics, Oulu Business School; Natural Resources Institute Finland (Luke)); Rauli Svento (Department of Economics, Oulu Business School) |
| Abstract: | Choosing a specific heating system is a complex and difficult decision for homeowners as there exists a wide array of heating technologies with different characteristics that one can consider before purchasing. We include multiple heating technologies and attributes in our Choice Experiment design and explore the effect of perceived choice complexity on the randomness of choices. In particular, we investigate how different self-evaluated factors of choice complexity affect mean scale and scale variance. Our findings suggest that perceived choice complexity has a systematic impact on the parameters of econometric models of choice. However, there are differences between alternative self-evaluated complexity-related covariates. Results indicate that individuals who report that answering the choice tasks was difficult have less deterministic choices. Perceptions of the realism of home heating choice options also affect scale and scale variance. |
| Keywords: | Home heating, Choice experiment, Choice modelling, Scale heterogeneity, Generalized mixed logit, Complexity |
| JEL: | D12 Q40 Q48 Q51 Q55 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2016-30&r=dcm |
| By: | Bocher, Temesgen; Sindi, Kirimi; Nshimiyimana, Jean Claude; Low, Jan |
| Abstract: | Identifying consumer preferences and willingness to pay for Orange Fleshed Sweet potato (OFSP) juice were the objectives of the study. This study is based on a structured survey and taste tests administered to 980 randomly approached and verbally agreed participants (384 female and 562 male) selected from seven different markets representing different income groups in Rwanda. Four juices types were tested: two popular brands of 100% pineapple juice, one 100%-OFSP juice, and one 80% OFSP-20% pineapple juice blend. During the taste testing, there was no information provided as to what the type or brand of the juice was. The consumers ranked different juice attributes such as aroma, taste, color, “right” amount of sugar, and aftertaste by rating using a Likert scale (1 to 5, with five being the most preferred). Heckman two-stage probit model is used to analyze willingness-to-pay and a multinomial logit model to analyze the determinants of juice choice. It is indicated that both consumer characteristics and juice attributes influence willingness-to-pay and preference: sex of the consumer, juice buying frequency, aroma, right amount of sugar, taste of the juice, and vitamin A knowledge were positively associated with willingness-to-pay and juice choice. Without nutritional information on OFSP juice, the willingness-to-pay for the standard juices compared to OFSP-based juices were statistically higher; but with nutritional information the willingness-to-pay and juice choice for OFSP juice was significantly improved. It is concluded that nutritional information, particularly about the role that vitamin A plays in health is important in determining the juice preferences and willingness to pay. |
| Keywords: | Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:249314&r=dcm |
| By: | Juma, Charity Nabwire; Otieno, David Jakinda; Oluouch-Kosura, Willis; Gyau, Amos; Oduol, Judith Auma |
| Abstract: | Geographical indication (GI) is an important measure for revealing the origin of a product and communicating the salient site-specific practices embedded in the value chain. For most products and services, recent literature has extensively documented consumer concerns for GI and other quality attributes especially in the developed nations. However, in the developing countries there is very limited empirical analysis of these aspects; in fact there is a complete lack of research insight on GI for honey in Kenya. The present study contributes to fill this knowledge gap through a choice experiment survey of consumer perceptions and preferences for GI and other important quality attributes in honey. The study applied the random parameter logit (RPL) model to analyze data from a random sample of 478 honey consumers drawn from three distinct areas in Kenya: a rural semi-arid honey producing area, Kitui; a humid production-consumption area, Nakuru and; a cosmopolitan net consuming area, the city of Nairobi. Results show that consumers have significant positive preferences for GI labelling, floral source disclosure, organic production methods and joint public-private certification of honey quality. The middle income category of consumers and the relatively aged ones have a specifically strong preference for organic honey. These insights should be integrated in the improvement of honey value chains. |
| Keywords: | Geographical indication, quality-attributes, honey, consumers, Kenya, Consumer/Household Economics, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:246915&r=dcm |
| By: | Kihoro, Esther M.; Irungu, Patrick; Nyikal, Rose; Maina, Immaculate N. |
| Abstract: | This study sought to contribute to a better understanding of market dynamics of green grams as a traditional crop within a resource poor producer community in Mbeere South sub-County, Kenya. The study aimed to characterize the green gram marketing channels and to evaluate the factors that influence the choice of green gram marketing channel by the producers. A multinomial logit model was estimated through data from households growing green grams. Results show that 70 percent of farmers in the study site grew green grams. On average, each household has 1 to 2 acres of land under green grams production each year. Farmers used three marketing channels, rural retailers (58 percent), wholesalers (14 percent) and assemblers (26 percent). The multinomial results showed that Age of the farmer (P=0.06), access to credit (p=0.065), price of green grams (p=0.079), and selling as individuals (p=0.000) positively influenced the choice of rural assembler marketing channel. Gender of the household head (p=0.001), production cost (p=0.000) and use of mobile phone to access marketing information (p=0.019) positively influenced the probability of choosing rural retailer over wholesaler marketing channel. In conclusion, farmers prefer marketing channels where they incur low production and transport cost and that offer higher prices to maximize profits. The study recommended first, identification and prioritization of unique farmer-trader relations that enhance adaptive resilience and increase farmers marketing options. Secondly, interventions to enhance market-based signals e.g. price should be reinforced. |
| Keywords: | marketing channels, green grams, ASALs, market signals, Marketing, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:249331&r=dcm |
| By: | Rao, E.J.O.; Mtimet, N.; Twine, E.; Baltenweck, I.; Omore, A. |
| Abstract: | Dairy business hubs present opportunities for efficiently linking farmers to input and output markets. Yet participation by smallholder dairy farmers in these hubs will only be realized if the hub options are adapted to fit the needs of farmers. In this study we have analyzed preference for dairy business hubs in Tanzania where ILRI is currently implementing adapted hub options. Using survey data from smallholder dairy producers from Tanga and Morogoro and applying the choice experiment method we find significant preference for hub options with higher milk prices and payment for milk on a fortnight rather than cash basis. Farmers also prefer hub options that bundle milk marketing with input provision. For bundled inputs, smallholder dairy farmers prefer hub options that allow payment for such inputs via credit or check-off rather than cash. Our analyses also reveal significant heterogeneity in preference among farmers hence the need for advanced analytical approaches that can handle such heterogeneity. Emerging dairy hubs in Tanzania should be supported to either establish in-house input provision arrangements or to enter into contracts with major agro-input dealers in their environs. |
| Keywords: | Livestock Production/Industries, Marketing, Research and Development/Tech Change/Emerging Technologies, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:246961&r=dcm |
| By: | Houessionon, Prosper; Balana, Bedru; Zahodogo, Pam; Thiombiano, Noël; Bossa, Aymar |
| Abstract: | This paper describes the results of a choice experiment measuring social benefits for sustainable management practices related to water and resource recovery and reuse solutions in agricultural in Burkina-Faso for ecosystem services preservation. Sustainable management is conceptualized with four illustrative practices that impact water availability, water save, soil restoration, soil fertility improvement and productivity growth: storing water with small water infrastructure in rainy season, complete fresh water with waste water from household, watering crop with drip irrigation and fertilizing with organic matter of sludge from septic tank (human faeces). Data for a choice experiment are collected using a face-to-face survey of farmers practicing off-season production in two region (Dano and Ouagadougou) in Burkina- Faso. Results identify substantial benefits for ecosystem services preservation, the use of small water infrastructure, drip irrigation, waste water and organic matter from human faeces. Results also suggest that the estimated household benefits of all fours sustainable management practices combined are similar in magnitude to the benefits from ecosystem services alone. Based on model results, policy and future research may wish to examine possibilities for subsidizing sustainable management practices in urban-influenced areas as a more cost-effective means of providing benefits similar to those realized through ecosystem services sustainability. |
| Keywords: | Choice experiment, Water, Organic matter, Drip irrigation, Burkina-Faso, Land Economics/Use, Resource /Energy Economics and Policy, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:249343&r=dcm |
| By: | Sibiko, Kenneth W.; Veettil, Prakashan C.; Qaim, Matin |
| Abstract: | Smallholder farmers are particularly vulnerable to climate shocks but often lack access to agricultural insurance. Weather index insurance (WII) could reduce some of the problems associated with traditional, indemnity-based insurance programs, but uptake has been lower than expected. One reason is that WII contracts are not yet sufficiently tailored to the needs and preferences of smallholders. This study combines survey and choice-experimental data from Kenya to analyse the experience with an existing WII program and how specific changes in contractual design might increase insurance uptake. Many smallholders struggle with fully understanding the functioning of the program, which undermines their confidence. Better training and communication are needed. Regular provision of relevant rainfall measurements and thresholds would significantly increase farmers’ willingness to pay for WII. Mechanisms to reduce basis risk are also valued by farmers, although not to the same extent as higher levels of transparency. Finally, offering contracts to small groups rather than individual farmers could increase insurance uptake. Group contracts may help to reduce transaction costs. Farmer groups can also be important platforms for learning about complex innovations, including novel risk transfer products. While the concrete results are specific to Kenya, they provide some broader policy-relevant insights into typical issues of WII in a small-farm context. |
| Keywords: | Climate risk, smallholder farmers, crop insurance, discrete choice experiment, Africa, Environmental Economics and Policy, Farm Management, Research and Development/Tech Change/Emerging Technologies, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:246399&r=dcm |
| By: | Gautier, Eric; Le Pennec, Erwan |
| JEL: | A1 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:30214&r=dcm |
| By: | Chen, Daniel L.; Schonger, Martin |
| Abstract: | Recent advances in economic theory, largely motivated by experimental findings, have led to the adoption of models of human behavior where a decision-maker not only takes into consideration her own payoff but also others’ payoffs and any potential consequences of these payoffs. Investigations of deontological motivations, where a decision-maker makes her choice not only based on the consequences of a decision but also the decision per se have been rare. We propose an experimental method that can detect an individual’s deontological motivations by varying the probability of the decision-maker’s decision having consequences. It uses two states of the world, one where the decision has consequences and one where it has none. We show that a purely consequentialist decision-maker whose preferences satisfy first-order stochastic dominance will choose the decision that leads to the best consequences regardless of the probability of the consequential state. A purely deontological decision-maker is also invariant to the probability. However, a mixed consequentialist-deontological decision-maker’s choice changes with the probability. The direction of change gives insight into the location of the optimand for one’s duty. We provide a formal interpretation of major moral philosophies and a revealed preference method to detect deontological motivations and discuss the relevance of the theory and method for economics and law. |
| Keywords: | Consequentialism, deontological motivations, normative commitments, social preferences, revealed preference, decision theory, first order stochastic dominance, random lottery incentive method |
| JEL: | D6 K2 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:31113&r=dcm |
| By: | Chen, Daniel L.; Schonger, Martin |
| Abstract: | Recent advances in economic theory, largely motivated by experimental findings, have led to the adoption of models of human behavior where a decision-maker not only takes into consideration her own payoff but also others’ payoffs and any potential consequences of these payoffs. Investigations of deontological motivations, where a decision-maker makes her choice not only based on the consequences of a decision but also the decision per se have been rare. We propose an experimental method that can detect an individual’s deontological motivations by varying the probability of the decision-maker’s decision having consequences. It uses two states of the world, one where the decision has consequences and one where it has none. We show that a purely consequentialist decision-maker whose preferences satisfy first-order stochastic dominance will choose the decision that leads to the best consequences regardless of the probability of the consequential state. A purely deontological decision-maker is also invariant to the probability. However, a mixed consequentialist-deontological decision-maker’s choice changes with the probability. The direction of change gives insight into the location of the optimand for one’s duty. We provide a formal interpretation of major moral philosophies and a revealed preference method to detect deontological motivations and discuss the relevance of the theory and method for economics and law. |
| Keywords: | Consequentialism, deontological motivations, normative commitments, social preferences, revealed preference, decision theory, first order stochastic dominance, random lottery incentive method |
| JEL: | D6 K2 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:31140&r=dcm |
| By: | Diro, Samuel; De Groote, Hugo; Gunarata, Nilupa |
| Abstract: | Quality Protein Maize (QPM) has been fortified with lysine and tryptophan to improve the poor protein quality of conventional maize. For farmers to adopt QPM, there needs to be a market for it. This paper studies how nutritional information and sensory quality affects WTP for QPM grain, white and yellow, among rural consumers farmers in Jimma zone, Ethiopia. The study used affective tests, both central location test (CLT) and modified home-use (MHUT), and the Becker-DeGroot-Marschak (BDM) experimental auction mechanism to estimate WTP. The CLT was conducted with 192 participants, while 210 mothers with children aged 6-23 months participated in the MHUT. To analyze the effect of information on WTP, the participants were randomly assigned to two treatment groups; first group was also provided with information after the BDM, and the BDM was repeated after information was provided. The results of the affective tests preparations of white and yellow QPM were significantly more appreciated than those of their white and yellow conventional maize counterparts. The BDM mechanism results revealed that respondents were willing to pay more for QPM grain than for conventional maize. Further, nutritional information boosted bids for white and yellow QPM grain and reduced the bids of white and yellow CM grains. The main factor affecting WTP for QPM was its sensory quality. The study, finally, recommends marketers and food processors to use the QPM’s favorable sensory characteristics to penetrate in to the market and to emphasize on formal and non-formal information dissemination mechanisms for its wider adoption and dissemination. |
| Keywords: | Sensory evaluation, willingness to pay, Becker-DeGroot-Marschak, central location test, modified home-use test, Consumer/Household Economics, Demand and Price Analysis, |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaae16:246979&r=dcm |