BAYES' ESTIMATES OF THE DOUBLE HURDLE MODEL IN THE PRESENCE OF FIXED COSTS

We present a model of market adoption (participation) where the presence of non-negligible fixed costs leads to non-zero censoring of the traditional double-hurdle regression. Fixed costs arise due to household resources that must be devoted a priori to the decision to participate in the market. These costs-usually a cost of time-motivate two-step decision-making and focus attentions on the minimum-efficient scale of operations (the minimum amount of milk sales) at which market entry becomes viable. This focus, in turn, motivates a non-zero-censored Tobit regression estimated through routine application of Markov chain Monte Carlo Methods.market participation, fixed costs, double-hurdle model, censored regression., Financial Economics, O1, O11, C34, O13, Q16, D1,

The Economics of Participation and Time Spent in Physical Activity

This paper examines the economics of participation in physical activity by developing a consumer choice model of participation and estimating it using data drawn from the Behavioral Risk Factor Surveillance Survey (BRFSS). Both emphasize that individuals face two distinct decisions: (1) should I participate; and (2) how much time should I spend participating? The results indicate that economic factors like income and opportunity cost of time are important determinants of physical activity and that physical activity is a normal good. Individual characteristics also play an important role in determining the amount of time spent in physical activity. Participation and time spent decline with age. Females, married people, households with children, blacks and hispanics all spend less time engaged in physical activity than males, single people, childless households and whites. Public policy interventions aimed at improving physical activity of Americans targeted to specific sub-populations are likely to be more effective than broad-based policies.time allocation; physical activity; sport participation

Agglomeration within and between regions: Two econometric based indicators

We propose two indexes to measure the agglomeration forces acting within and between different regions. Unlike the existing measures of agglomeration, our model-based indexes allow for simultaneous treatment of both aspects. Local plant diffusion in a given industry is modelled as a spatial error components process (SEC). Maximum likelihood inference on model parameters is dealt with, including the problem of data censoring. The statistical properties of standard agglomeration indexes in the data environment provided by our SEC model are then treated. Finally, our methodology is applied to Italian census data for both manufacturing and service industries.agglomeration, spatial autocorrelation, spatial error components model

Workplace Safety: Estimating Workers' Marginal Willingness to Pay

The aim of the present paper is to empirically estimate the monetary value workers place on safer working conditions. The marginal willingness to pay for workplace safety is estimated using data on job durations together with data on accident risks and wages. The results indicate that individuals value safety to 0.65-4.1 percent of annual wages. Male workers in service occupations are found to have the highest marginal willingness to pay. Female blue-collar workers are found to value workplace safety higher than male blue-collar workers.Search; Accelerated duration; Wage differentials; Sweden

Strategic interaction between inter vivos gifts and housing acquisition

This paper models the interdependence of parental inter vivos gifts and children\u27s home purchases when informal care affects decision making. We use data from Japanese households who purchased a detached house in an urban area to test this strategic interaction. Considering both censoring and endogeneity of inter vivos gifts, which are identified by information on formal care, our preferred results demonstrate that inter vivos gifts do not significantly increase the purchase price of housing. Theory suggests that this occurs when informal care tends to be a heavy burden for children. However, subsample analysis of young home buyers indicates that the empirical results are consistent with the literature: children who receive parental gifts tend to purchase a higher-priced dwelling. One potential explanation is that relatively young adult children are less likely to take charge of care obligations, and accordingly, parental gifts are only expected to relax their liquidity constraints. Subsample analysis appears to indicate that the underlying motivation of parental gifts is influenced by the timing of children\u27s home purchase decisions

Patterns of Trade in the Market for Used Durables: Theory and Evidence

The consumption value of a durable good diminishes as it ages due to physical deterioration and consumers' preference for the new. We develop a model of consumer specialization and trade in the market for used durables based on imperfect substitutability. Imperfect substitutability across vintages is reflected in a declining market price over time. Heterogeneous consumers maximize utility by specializing in durables of differing ages. Consumers must trade to acquire their preferred vintage each period. When there are transaction costs in the secondhand market, the volume of trade due to specialization increases with imperfect substitutability. We examine the determinants of vehicle ownership transfers in Illinois, a measure of trade volume. Observed patterns of trade across automobile model years are consistent with our model, and inconsistent with a model of adverse selection.

Limited financial market participation: a transaction cost-based explanation

This paper focuses on the issue of limited financial market participation and determines a lower bound on the level of fixed transaction costs that are required to reconcile observed portfolio choices with asset returns within an isoelastic utility framework. The bound is determined from the set of conditions that ensure the optimality of consumption behavior by financial market non-participants. It represents the lowest possible cost rationalizing observed non-participation choices by providing a measure of the forgone utility gains from participation for observed non-participants. Such gains are related both to the magnitude of financial market returns and to the opportunity of smoothing consumption, with the benefits of the former decreasing in the degree of relative risk aversion and those of the latter increasing in it. Using the US Consumer Expenditure Survey, I find that a yearly cost of at least 70 is needed to rationalize non-participation for a consumer with log utility and who can trade in the S&P500 CI. This lower bound declines rapidly in risk aversion for levels of risk aversion up to two/three; for higher values, it levels off. A yearly cost of at least 31 is needed to rationalize non-participation for a consumer with log utility and who can trade in US Treasury Bills. This lower bound rises steadily in risk aversion

A new machine learning approach to support asset management in water distribution networks

One of the main causes of the widespread problem of freshwater scarcity lies in unfruitful maintenance of distribution infrastructure, leading to failures with consequent waste of precious resources. It is estimated that more than 25% of the annual loss of water is due to poor conditions of the distribution networks and, in a scenario of continuously increasing demand for water, effects of such inefficiency might be even more dramatic, beyond the merely economic aspect. However, with the rise of data analysis, the awareness of the power of predictive technologies and machine learning techniques, the opportunity to make use of these tools to support decision making has become more than a hope. With this study, the author attempts to address the problem of usage of historical data of pipes and their failures in the Spanish city of Manresa to deduce conclusions on how to conduct maintenance interventions. After conducting an explorative study on how pipes intrinsic factors may have reflections on breakages, machine learning algorithms (Logistic Regression and Random Forest have been chosen in this thesis) are used to predict pipe failures over time. Lately, results from predictions will be used to take out conclusions from two different assessment models. The first method, given the structure of cost of a general distribution company, tries to establish the optimal ratio between sensitivity and sensibility of a predictive model to return the best economic benefit from the predictive maintenance. The second approach wants to assess how the uptime of the service level can be improved whether relying on prediction to replace pipes, given a certain agreed investment budget. In an old industry such as water distribution, difficulties come up not only during the development of predictive models but also during the reconstruction of the data on which training and testing models, since they can suffer from inconsistencies. Indeed, data gathering has not unique and standardized methodologies and time and people take-over have changed procedures during the data collection, making the whole work harde

Saving Decisions of the Working Poor: Short-and Long-Term Horizons

We explore the predictive capacity of short-horizon time preference decisions for long-horizon investment decisions. We use experimental evidence from a sample of Canadian working poor. Each subject made a set of decisions trading off present and future amounts of money. Decisions involved both short and long time horizons, with stakes ranging up to six hundred dollars. Short horizon preference decisions do well in predicting the long-horizon investment decisions. These short horizon questions are much less expensive to administer but yield much higher estimated discount rates. We find no evidence that the present-biased preference measures generated from the short-horizon time preference decisions indicate any bias in long-term investment decisions. We also show that individuals are heterogeneous with respect to discount rates generated by short-horizon time preference decisions and long-horizon time preference decisions. Dans cet article, nous évaluons si les préférences exprimées pour le présent peuvent prédire les décisions d’investissement dans le long terme. L’article mobilise l’approche de l’économie expérimentale avec comme participants des travailleurs canadiens à faibles revenus. Chaque participant est invité à choisir entre une somme qu’il peut toucher à très court terme et un montant plus élevé, mais qui ne lui sera versé que plus tard dans le temps. Pour certains choix, les montants ne seront disponibles que dans 7 ans et peuvent atteindre jusqu’à 600 $. Nous trouvons que les décisions entre le présent et un horizon de court terme permettent de prédire les arbitrages réalisés par les participants entre le présent et des décisions à plus long terme. Ce résultat est important dans la mesure où il est plus difficile et coûteux d’étudier les décisions de long terme que celles de court terme. Nous observons également une forte hétérogénéité entre les participants relativement à leurs taux d’escompte de court et de long terme.intertemporal choice, field experiments, risk attitudes, choix intertemporels, économie expérimentale, attitudes vis-à-vis le risque