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on Discrete Choice Models |
| By: | Sergio Colombo (Department of Agricultural Economics, IFAPA); Wiktor Budziński (Faculty of Economic Sciences, University of Warsaw); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Klaus Glenk (Scotland’s Rural College, SRUC) |
| Keywords: | Choice experiment, Hypothetical bias, mitigation strategies |
| JEL: | C1 Q1 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2020-20&r=all |
| By: | Milan Scasny (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic; Environmental Centre, Charles University, Czech Republic); Lydia Chikumbi (School of Economics, University of Cape Town, South Africa); Edwin Muchapondwa (School of Economics, University of Cape Town, South Africa); Djiby Thiam (School of Economics, University of Cape Town, South Africa) |
| Abstract: | Recently, the South African wine industry launched the world's first ‘no sulphite added’ wine made from indigenous Rooibos & Honey bush toasted wood chips. This wood chip contains antioxidants properties known to protect the wine from oxidation. On the other hand, SO2, as a preservative, is often perceived by wine consumers as causing headaches and migraine. Differentiated wines based on their SO2 content may be a profitable marketing avenue for the struggling industry. We interviewed more than 600 wine consumers to investigate perceptions on wine preservatives and to elicit willingness to pay for the innovative alternative based on Rooibos & Honey bush wood chips. Alongside the wine preservatives, we also examine consumers’ preferences for organic wine attribute and wine quality measured by 100-points quality score, and the cost. Based on the results from the mixed logit model, we find that consumers are willing to pay additionally R56.48(€3.53)per bottle of wine with natural Rooibos & Honey bush wood chips, while they are ready to pay R19.52(€1.22) more for organic wine and R1.60(€0.10) for each point on quality score. Consumer preferences are not statistically different between red and white wine but differ considerably across consumers, in particular, those who believe SO2 in wine cause headaches are willing to pay for replacing sulphur-based preservatives by a natural one at least three times more. Marketing implications are offered for the wine industry. Despite being the best available, existing data is still imperfect, and we therefore call for better data in the form of MNCs’ unconsolidated, public country-by-country reporting data. |
| Keywords: | wine preservatives; willingness to pay; discrete choice experiment |
| JEL: | O31 Q10 P46 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2020_23&r=all |
| By: | Anais Lamour (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Subervie Julie (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | We use primary data from a choice experiment carried out with 207 coffee farmers in Costa Rica, in order to study their willingness to adopt various agroforestry systems under various types of support. We test four adaptation strategies that are based on resistant coffee varieties introduction, timber tree species production and/or shade tree density increase. Revealed preferences suggest that most of the respondents do value the introduction of resistant varieties. They are willing to plant twice the number of trees in their plantations when these are combined with resistant varieties. Conversely, all agroforestry systems requiring timber trees to be planted are chosen significantly less often and on average, their adoption would require a compensation scheme. We moreover find that a large majority of respondents is very responsive to non-monetary rewards, namely a subsidized credit, a free trial of resistant coffee seedlings or technical assistance. We conclude that each of these incentivescould be used as an incentive to induce land use changes |
| Keywords: | Payment for Environmental Services,Non-monetary Incentives,Climate change,Choice Experiment,Coffee,Costa Rica |
| Date: | 2020–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpceem:hal-02892085&r=all |
| By: | Schneider, Ulrich |
| Abstract: | I study the identification of time preferences in dynamic discrete choice models. Time preferences play a crucial role in these models, as they affect inference and counterfactual analysis. Previous literature has shown that observed choice probabilities do not identify the exponential discount factor in general. Recent identification results rely on specific forms of exogenous variation that impact transition probabilities but not instantaneous utilities. Although such variation allows for set identification of the respective parameter, point identification is only achieved in limited cases. To circumvent this shortcoming, I focus on models in which economic decision-makers might be restricted in their choice sets. I show that time preferences can be identified provided that there is variation in the probability of being restricted that does not affect utilities or transition probabilities. The derived exclusion restrictions are easy to interpret and potentially fulfilled in many empirical applications. |
| Keywords: | discount factor; identification; dynamic discrete choice |
| JEL: | C14 C23 C61 |
| Date: | 2019–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102137&r=all |
| By: | Kono, Tatsuhito; Sega, Kousuke; Seya, Hajime |
| Abstract: | Based on an inter-temporal general equilibrium model, we rigorously derive a measurement method using dynamic changes in cross-sectional hedonic prices to estimate the willingness to pay for urban esthetic projects. The method has advantages in common with a difference-in-differences approach. For example, fewer attributes are used as explanatory variables than with a cross-sectional hedonic approach because fixed effects can be ignored. It can therefore mitigate problems related to omitted variables and multicollinearity, which are prevalent in cross-sectional hedonic approaches. Nevertheless, either the measurement or one additional assumption of marginal utility of income is necessary for provision of correct measures. In addition, we consider the existence of condominiums, which has not been supposed in conventional hedonic approaches but must always be considered in practical situations. We apply the method to utility line undergrounding projects. |
| Keywords: | project evaluation, amenities, willingness to pay, dynamic hedonic approach, difference in differences |
| JEL: | C1 R11 R13 R14 R52 |
| Date: | 2020–07–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102064&r=all |
| By: | Kory Kroft; René Leal Vizcaíno; Matthew J. Notowidigdo; Ting Wang |
| Abstract: | This paper highlights a previously-unnoticed property of commonly-used discrete choice models, which is that they feature parallel demand curves. Specifically, we show that in random utility models, inverse aggregate demand curves shift in parallel with respect to variety if and only if the random utility shocks follow the Gumbel distribution. Using results from Extreme Value Theory, we provide conditions for other distributions to generate parallel demands asymptotically, as the number of varieties increase. We establish these results in the benchmark case of symmetric products, illustrate them using numerical simulations and show that they hold in extended versions of the model with correlated tastes and asymmetric products. Lastly, we provide a “proof of concept” of parallel demands as an economic tool by showing how to use parallel demands to identify the change in consumer surplus from an exogenous change in product variety. |
| JEL: | D01 D11 L0 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27437&r=all |
| By: | Catherine Decker (Institute of Biodiversity, Animal Health and Comparative Medicine, University of Glasgow; Nelson Mandela African Institution of Science and Technology); Nick Hanley (Institute of Biodiversity, Animal Health and Comparative Medicine, University of Glasgow); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Thomas A. Morrison (Institute of Biodiversity, Animal Health and Comparative Medicine, University of Glasgow); Julius Keyyu (Tanzania Wildlife Research Institute); Linus Munishi (Nelson Mandela African Institution of Science and Technology); Felix Lankester (Paul G. Allen School for Global Animal Health, Global Animal Health Tanzania); Sarah Cleaveland (Institute of Biodiversity, Animal Health and Comparative Medicine, University of Glasgow) |
| Abstract: | Malignant Catarhal Fever (MCF), transmitted from wildebeest to cattle, threatens livestock-based livelihoods and food security in many areas of Africa. Many herd owners reduce transmission risks by moving cattle away from infection hot-spots, but this imposes considerable economic burdens on their households. The advent of a partially-protective vaccine for cattle opens up new options for disease prevention. In a study of pastoral households in northern Tanzania, we use stated preference choice modelling to investigate how pastoralists would likely respond to the availability of such a vaccine. We show a high probability of likely vaccine uptake by herd owners, declining at higher vaccine costs. Acceptance increases with more efficaceous vaccines, in situations where vaccinated cattle are ear-tagged, and where vaccine is delivered through private vets. Through analysis Normalized Density Vegetation Index (NDVI) data, we show that the reported MCF incidence over 5 years is highest in areas with greatest NDVI variability and in smaller herds. Trends towards greater rainfall variability suggest that MCF avoidance through traditional movement of cattle away from wildebeest will become more challenging and that demand for an MCF vaccine will likely increase. |
| Keywords: | vaccine, cattle, Malignant Catarhal Fever, Tanzania, stated preference, choice modelling, wilingness to pay |
| JEL: | Q12 Q51 D12 H57 I19 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2020-26&r=all |
| By: | Fabian Dvorak |
| Abstract: | stratEst is a software package for the estimation of finite mixture models of discrete choice strategies in the statistical computing environment R. Discrete choice strategies can be customized by the user to fit the environment in which choices are made. The parameters of the strategy estimation model describe the behavior of each strategy and how frequent each strategy is in the population. The estimation function of the package uses the expectation maximization algorithm and the Newton-Raphson method to find the maximum likelihood estimates of the model parameters. The estimation function can also be used to fit a strategy estimation model with individual level covariates to explain the selection of strategies by individuals. The package contains functions for data processing and simulation, strategy generation, parameter tests, model checking, and model selection. |
| Keywords: | discrete choice strategies, finite mixture model, R |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:twi:respas:0119&r=all |
| By: | Rosalina Palanca-Tan (Economics Department, Ateneo de Manila University) |
| Abstract: | Koronadal households benefit from Lake Sebu’s natural and cultural resources in terms of recreation, tourism income generation, supply of high quality tilapia, agricultural products supply, potential hydroelectric power source, cultural heritage, biodiversity, and climate change mitigation. These benefits encompass both use and non-use values which are integrated in a single estimate using the contingent valuation method. In the study, Koronadal households are asked for their willingness to pay (WTP) or contribute to natural and cultural resources rehabilitation and preservation efforts in the form of a lump-sum monthly amount collected together with their electricity bill payment. Household’s mean WTP is estimated to be between PhP52.42 (US$1.04) and PhP64.39 (US$1.27) per month. Multiplying the annualized WTP by the number of households in Koronadal, total potential annual contributions from Koronadal City would range from PhP29,244,533 (US$577,841) to PhP35,863,170 (US$708,618). Even just a fraction of this potential collection can support essential conservation efforts in Lake Sebu which up to the present have been inadequate due to financial constraints. Moreover, results of the regression analysis reveals that households are more likely to support the preservation program if the amount of required contribution is smaller and household income is higher. Older and more educated respondents are likewise more likely to support the program. |
| Keywords: | benefit valuation, contingent valuation method, cultural heritage, natural environment, willingness to pay |
| JEL: | Q26 Q51 Q56 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:agy:dpaper:202010&r=all |
| By: | José Javier Soto Martínez; Luis Gabriel Márquez Díaz; Luis Fernando Macea Mercado |
| Abstract: | Esta investigación examina las preferencias de los usuarios en la escogencia de opciones de estacionamiento en el centro de Cartagena, Colombia. Se emplean modelos de elección discreta, incorporando variaciones sistemáticas de los gustos. Los modelos se estimaron a partir de encuestas de preferencias declaradas (PD), usando como variables explicativas el costo del estacionamiento, el tiempo de acceso desde el parqueadero hasta el destino y el tiempo de búsqueda de estacionamiento. Los resultados indican que el costo es el parámetro más importante a la hora de elección del estacionamiento. Por otra parte, las personas con ingreso alto penalizan menos la tarifa en el proceso de elección, contrario a las personas con vehículos de bajo costo, cuya penalización es mayor. Se estimaron elasticidades y la disposición a pagar por disminuir los tiempos de búsqueda de estacionamiento y de acceso al destino, encontrándose valores entre COP $89/ min – COP $352/min y COP $123/min – COP $489/min, respectivamente. |
| Date: | 2018–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:col:000162:018277&r=all |
| By: | Dey, Oindrila; Chakravarty, Debalina |
| Abstract: | Electric Street Car (ESC) has established itself as an ideal public transport system for urban agglomeration by offering better safety, minimum pollution and conservation of fossil fuel. Yet, India envisions going all-electric by 2030 by procuring electric buses (e-buses) rather than ESCs. The crucial question is, why not upgrade the existing ESC considering that the e-buses need a profound infrastructural development in India. This paper studies the potential uptake rate of ESC over e-buses using stratified sampling data from 1226 daily public transport commuters of Kolkata, the only Indian city having an operational ESCs. We identify the demographic, psychometric and socio-economic factors influencing the probabilistic uptake of ESC over e-buses using a random utility choice model. It estimates that 38% of the commuters demand ESC over e-buses given the alternatives’ comparative details. ESC can be a model electric public transport if there is an improvement in factors, like frequent availability of ESCs and technological upgradation. By promoting the ESC services over e-buses, the government can potentially save on public investment and reach a low carbon pathway cost-effectively. The findings have crucial implications in exploration of the operational feasibility of ESC in the small and medium-sized cities of developing economies like India. |
| Keywords: | Public Transport, Electric Bus, Electric Street Car, Sustainability, Urban Area |
| JEL: | Q40 Q56 R49 R58 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101000&r=all |