Combining mixed logit models and random effects models to identify the determinants of willingness to pay for rural landscape improvements

This paper reports the findings from a discrete choice experiment study designed to estimate the economic benefits associated with rural landscape improvements in Ireland. Using a mixed logit model, the panel nature of the dataset is exploited to retrieve willingness to pay values for every individual in the sample. This departs from customary approaches in which the willingness to pay estimates are normally expressed as measures of central tendency of an a priori distribution. In a different vein from analysis conducted in previous discrete choice experiment studies, this paper uses random effects models for panel data to identify the determinants of the individual-specific willingness to pay estimates. In comparison with the standard methods used to incorporate individual-specific variables into the analysis of discrete choice experiments, the analytical approach outlined in this paper is shown to add considerably more validity and explanatory power to welfare estimatesAgri-environment, discrete choice experiments, mixed logit, panel data, random effects, willingness to pay, Demand and Price Analysis, Environmental Economics and Policy, C33, C35, Q24, Q51,

Demand for improved food safety and quality: a cross-regional comparison

This paper explores the demand for improved safety and quality for meat products among consumers in two regions using a discrete choice experiment methodology. The study takes account of preferences from consumers across Great Britain and the Republic of Ireland. The features explored in the choice experiment include food safety, traceability, animal health and welfare, region of origin and price. The results suggest a large difference between willingness to pay and implicit ranking of attributes across regions. Meat products that come from ‘Ireland’ are most highly demanded among the features for Irish consumers, whereas consumers based in Great Britain value enhanced testing and animal health and welfare standards highest. Furthermore, a high correlation exists, in both regions, between respondents perception of the risk associated with consuming the meat products and the price premium they are willing to pay for the enhanced featuresFood Consumption/Nutrition/Food Safety,

Using choice experiments to explore the spatial distribution of willingness to pay for rural landscape improvements

We report findings from a choice experiment survey designed to estimate the economic benefits from policy measures which improve the rural landscape under an agri-environment scheme in the Republic of Ireland. Using a panel mixed logit specification to account for unobserved taste heterogeneity we derive individual- specific willingness to pay estimates for each respondent in the sample. We subsequently investigate the existence of spatial dependence of these estimates. Results suggest the existence of positive spatial autocorrelation for all rural landscape attributes. As a means of benefit transfer, kriging methods are employed to interpolate willingness to pay estimates across the whole of the Republic of Ireland. The kriged WTP surfaces confirm the existence of spatial dependence and illustrate the implied spatial variation and regional disparities in WTP for all the rural landscape improvements

Choosing ‘buy none’ in food choice analysis: the role of utility balance

Stated choice analysis is now a widely used and accepted methodology for exploring food choice. In stated choice experiments respondents are asked to make a choice between two or more alternatives, one of which typically takes the form of a ‘buy none’ option. It is widely recognised that respondents often perceive this option differently from the other alternatives and various reasons for this have been offered. Nevertheless, the role that utility balance among the experimentally designed options plays on the propensity of respondent’s choosing ‘buy none’ has largely been overlooked. Using a non-linear representation of utility we show that the ‘buy none’ choices are sensitive to utility balance. We further show how accommodating this provides an additional insight into choice behaviour and has a bearing on welfare calculationsdiscrete choice experiments, utility balance, status-quo bias, food choice, Consumer/Household Economics,

Lexicographic Preferences in Discrete Choice Experiments: Consequences on Individual-Specific Willingness to Pay Estimates

In discrete choice experiments respondents are generally assumed to consider all of the attributes across each of the alternatives, and to choose their most preferred. However, results in this paper indicate that many respondents employ simplified lexicographic decision-making rules, whereby they have a ranking of the attributes, but their choice of an alternative is based solely on the level of their most important attribute(s). Not accounting for these simple decision-making heuristics introduces systemic errors and leads to biased point estimates, as they are a violation of the continuity axiom and a departure from the use of compensatory decision-making. In this paper the implications of lexicographic preferences are examined. In particular, using a mixed logit specification this paper investigates the sensitivity of individual-specific willingness to pay (WTP) estimates conditional on whether lexicographic decision-making rules are accounted for in the modelling of discrete choice responses. Empirical results are obtained from a discrete choice experiment that was carried out to address the value of a number of rural landscape attributes in Ireland.Continuity axiom, Discrete Choice Experiments, Lexicographic Preferences, Mixed Logit, Individual-Specific Willingness to Pay

Using Discrete Choice Experiments to Derive Individual-Specific WTP Estimates for Landscape Improvements under Agri-Environmental Schemes: Evidence from the Rural Environment Protection Scheme in Ireland

Reported in this paper are the findings from two discrete choice experiments that were carried out to address the value of a number of farm landscape improvement measures within the Rural Environment Protection (REP) Scheme in Ireland. Image manipulation software is used to prepare photorealistic simulations representing the landscape attributes across three levels to accurately represent what is achievable within the Scheme. Using a mixed logit specification willingness to pay (WTP) distributions based on the parameter estimates obtained from the individual conditional distributions are derived. These estimates are subsequently adjusted and combined to account for baselines and levels of improvement resulting from the implementation of the REP Scheme. Individual-specific WTP estimates are thus obtained for the contribution of the Scheme to rural landscapes and are subsequently contrasted with the average cost of the Scheme across the Irish adult population. Results indicate that the Scheme contributes substantial benefits to rural landscapes.Agri-environment, Discrete choice experiments, Individual-specific WTP, Mixed logit

The Determinants of Brownfields Redevelopment in England

This paper uses discrete choice models, supported by GIS data, to analyse the National Land Use Database, a register of more than 21,000 English brownfields—previously used sites with or without contamination that are currently unused or underused. Using spatial discrete choice models, including the first application of a spatial probit latent class model with class-specific neighbourhood effects, we find evidence of large local differences in the determinants of brownfields redevelopment in England and that the reuse decisions of adjacent sites affect the reuse of a site. We also find that sites with a history of industrial activities, large sites, and sites that are located in the poorest and bleakest areas of cities and regions of England are more difficult to redevelop. In particular, we find that the probability of reusing a brownfield increases by up to 8.5% for a site privately owned compared to a site publicly owned and between 15 and 30% if a site is located in London compared to the North West of England. We suggest that local tailored policies are more suitable than regional or national policies to boost the reuse of brownfield sites

Students’ preferences for attributes of postgraduate economics modules: Evidence from a multi-profile best-worst scaling survey

In this study, we investigate Scottish postgraduate economics students' preferences for module design. Using a multi-profile best-worst scaling survey, we find that students have clear preferences on how they wish their modules to be delivered, taught and assessed. Furthermore, using a discrete mixtures modelling approach we explain the heterogeneous nature of preferences for the module attributes and the students' lexicographic preference orderings. We show how failing to address this leads to erroneous results and limits the ability to derive reliable prediction. The findings in this study should appeal to university staff involved in the design of postgraduate (as well as undergraduate) courses as it should help them better establish a coherent learning experience for students, through which students can attain their full academic potential

Including opt-out options in discrete choice experiments: issues to consider

Background: Providing an opt-out alternative in discrete choice experiments can often be considered to be important for presenting real-life choice situations in different contexts, including health. However, insufficient attention has been given to how best to address choice behaviours relating to this opt-out alternative when modelling discrete choice experiments, particularly in health studies. Objective: The objective of this paper is to demonstrate how to account for different opt-out effects in choice models.We aim to contribute to a better understanding of how to model opt-out choices and show the consequences of addressing the effects in an incorrect fashion.We present our code written in the R statistics program so that others can explore these issues in their own data. Methods: In this practical guideline, we generate synthetic data on medication choice and use Monte Carlo simulation. We consider three different definitions for the opt-out alternative and four candidate models for each definition. We apply a frequentist-based multimodel inference approach and use performance indicators to assess the relative suitability of each candidate model in a range of settings. Results: We show that misspecifying the opt-out effect has repercussions for marginal willingness to pay estimation and the forecasting of market shares. Our findings also suggest a number of key recommendations for DCE practitioners interested in exploring these issues. Conclusions: There is no unique best way to analyse data collected from discrete choice experiments. Researchers should consider several models so that the relative support for different hypotheses of opt-out effects can be explored

Preferences for public involvement in health service decisions: a comparison between best-worst scaling and trio-wise stated preference elicitation techniques

Stated preference elicitation techniques, such as discrete choice experiments and best-worst scaling, are now widely used in health research to explore the public’s choices and preferences. In this paper, we propose an alternative stated preference elicitation technique, which we refer to as ‘trio-wise’. We explain this new technique, its relative advantages, modeling framework, and how it compares to the best-worst scaling method. To better illustrate the differences and similarities, we utilize best-worst scaling Case2, where individuals make best and worst (most and least) choices for the attribute levels that describe a single profile. We demonstrate this new preference elicitation technique using an empirical case study that explores preferences among the general public for ways to involve them in decisions concerning the health care system. Our findings show that the best-worst scaling and trio-wise preference elicitation techniques both retrieve similar preferences. However, the capability of our trio-wise method to provide additional information on the strength of rank preferences and its ability to accommodate indifferent preferences lead us to prefer it over the standard best-worst scaling technique