Regional valuation of infrastructure improvements. The case of Swedish road freight

Is it possible to identify regional differences among shippers in their valuation of infrastructure improvements? The question is analysed within a random utility approach where parameters are estimated by a logit model. Data consists of a Swedish stated preference study from 1992. The results indicate that regional differences may exist but a considerable heterogeneity in the empirical material prohibit robust results in some cases. However, regional differences seem to exist when industrial mix, shipping distance and goods values are held constant. Independent of the limitations, the results should render implications to any infrastructure benefit analysis where parameters from spatial averages are used. The results are based on short term decisions and one should recognise that parameters may vary under mid- and long- term.Regional preferences; road transportation; freight demand; stated preference analysis; random utility models; logit model

Tests for the consistency of three-level nested logit models with utility maximization.

This paper provides necessary conditions for testing the local consistency of three-level nested logit models with random utility maximization. We find that for a model with two sub-nests per nest the conditions can lead to a substantial increase in the range of acceptable dissimilarity parameters, irrespective of the number of alternatives per sub-nest.Nested logit, Discrete choice, Random utility maximization

Valuing Animal Welfare with Choice Experiments: An Application to Swedish Pig Production

In this paper, the demand for animal welfare attributes when buying pork fillet is investigated among Swedish respondents. More specifically, the coefficients of an indirect utility function and willingness to pay for animal welfare attributes are estimated. The utility function is estimated using a multinomial logit and a random parameter logit model. A realistic scenario when modeling consumer choices is to allow for heterogeneity in preferences. The random parameter logit model departs from the well known IIA property and allows for a more flexible taste distribution across individuals. The need for assuming randomness of some parameters are evaluated by using a specification testing procedure with artificial variables developed by McFadden and Train (2000). From this study it can be concluded that the preferences for some of the animal welfare attributes are heterogenous across the respondents. There exists both negative and positive wtp for animal welfare attributes. Further, the study reports on the distribution of individual wtp.pig production, consumer valuation, animal welfare, multinomial logit model, random parameter logit model, Livestock Production/Industries,

Participation in Higher Education: A Random Parameter Logit Approach with Policy Simulations

In this paper we present a theoretical model of higher education participation. We assume that young people that complete upper secondary education are faced with three choices, go to higher education, not go to higher education or go to higher education and work part time. Utilizing the Living in Ireland survey data 1994-2001 we model this choice in an Irish context by variation in costs (direct and indirect), the estimated lifecycle returns and household credit constraints. Using a random parameters logit choice model we find that simulated lifecycle earnings positively impact the educational/labour choices of young individuals in Ireland. This positive relationship is also found to be true for a choice-specific household income variable constructed in the paper. From the random parameters logit estimations we also find that preferences for choices with higher simulated lifecycle earnings and household income vary across individuals. We conduct policy simulations from our estimations and found that increasing student financial aid levels by 10% combined with a slight widening of the income limits for these aids can lead to significant movement away from the decision to not enter higher education.higher education participation, random parameters logit model, lifecycle simulated earnings, higher education policy

SOME PRELIMINARY EVIDENCE ON SAMPLING OF ALTERNATIVES WITH THE RANDOM PARAMETERS LOGIT

Random utility models rely on the properties of the logistic distribution for ease of estimation, but this distribution implies the independence of irrelevant alternatives (IIA). The random parameters logit model offers a means of avoiding the IIA assumption as well as greater heterogeneity among agents, recreational anglers or beachgoers in the current application. A problem often encountered in the estimation of random utility models with many alternatives is the necessity of sampling alternatives or otherwise reducing the number of choices. Research has shown that in the random utility model, such changes in choice set still lead to consistent parameter estimates. However, with the random parameters logit, there is greater need to sample but no theoretical evidence that sampling is justified. In this paper we show the impact of sampling in a random parameters logit model. We find that sampling does not appear to change the parameter estimates substantially. We investigate two data sets: a study of beach use in the Chesapeake Bay and a study of marine recreational angling behavior for the Northeast of the U.S.Resource /Energy Economics and Policy,

Discrete choice models, which one performs better?

For over the last thirty years the multinomial logit model has been the standard in choice modeling. Development in econometrics and computational algorithms has led to the increasing tendency to opt for more flexible models able to depict more realistically choice behavior. This study compares three discrete choice models, the standard multinomial logit, the error components logit, and the random parameters logit. Data were obtained from two choice experiments conducted to investigate consumers’ preferences for fresh pears receiving several postharvest treatments. Model comparisons consisted of in-sample and holdout sample evaluations. Results show that product characteristics hence, datasets, influence model performance. We also found that the multinomial logit model outperformed in at least one of three evaluations in both datasets. Overall, findings signal the need for further studies controlling for context and dataset to have more conclusive cues for discrete choice models capabilities.multinomial logit model, error components, random parameters, discrete choice, Research Methods/ Statistical Methods, C25, D12,

Using Random Parameters to Account for Heterogeneous Preferences in Contingent Valuation of Public Open Space

To test for preference heterogeneity in dichotomous choice contingent valuation responses, a random parameter logit (RPL) specification is used in this analysis. The RPL model confirms heterogeneity in respondents' preferences for protection of public open space, as reflected in statistically significant standard deviations of the normally distributed random parameters. Results show that while the majority of respondents indicate a positive willingness to pay (WTP), a minority of those surveyed report a negative WTP. Some of this variation in tastes remains even after individual characteristics and attitudinal variables are included in the model.contingent valuation, open space, random parameter logit, willingness to pay, Land Economics/Use,

Regional valuation of infrastructure improvements. The case of Swedish road freight

Is it possible to identify regional differences among shippers in their valuation of infrastructure improvements? The question is analysed within a random utility approach where parameters are estimated by a logit model. Data consists of a Swedish stated preference study from 1992. The results indicate that regional differences may exist but a considerable heterogeneity in the empirical material prohibit robust results in some cases. However, regional differences seem to exist when industrial mix, shipping distance and goods values are held constant. Independent of the limitations, the results should render implications to any infrastructure benefit analysis where parameters from spatial averages are used. The results are based on short term decisions and one should recognise that parameters may vary under mid- and long- term.Regional preferences; road transportation; freight demand; stated preference analysis; random utility models; logit model

Analysis of Covariance With Qualitative Data

In data with a group structure, incidental parameters are included to control for missing variables. Applications include longitudinal data and sibling data. In general, the joint maximum likelihood estimator of the structural parameters is not consistent as the number of groups increases, with a fixed number of observations per group. Instead a conditional likelihood function is maximized, conditional on sufficient statistics for the incidental parameters. In the logit case, a standard conditional logit program can be used. Another solution is a random effects model, in which the distribution of the incidental parameters may depend upon the exogenous variables.

Coverage of Retail Stores and Discrete Choice Models of Demand: Estimating Price Elasticities and Welfare Effects

Consumers’ choice set of products within stores can be limited. Ackerberg and Rysman (2005) address this problem by modeling unobserved consumer preferences over products and retail stores, leading to augmented demand specifications. Having Carbonated Soft Drink product level data, where we observe products’ store coverage, we are able to estimate their logit, nested logit and random coefficient logit specifications of demand in a structural model of equilibrium. Allowing for store coverage turns out to have a very significant impact on the estimated structural parameters and on the predictive power of the model. Taking these estimated structural parameters we perform a counterfactual whereby stores carry all products in the market. We find systematic increases in price elasticities and welfare in our new equilibrium. Competition in markets is more curtailed than normally assumed in structural models of industries.Carbonated Soft Drinks, differentiated products, discrete choice, store coverage, structural model, price elasticities, welfare