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Investigating Scale Heterogeneity in Latent Class Models

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  • Boeri, Marco
  • Doherty, Edel
  • Campbell, Danny
  • Longo, Alberto

Abstract

This paper develops and compares two alternative approaches to accommodate scale heterogeneity (also referred to as heteroskedasticity) in latent class models. Our modelling approach compares two different representations of heteroskedasticity, respectively associating the heterogeneity in scale factor with respondent's characteristics (i.e. observed scale heterogeneity) or deriving it probabilistically (i.e. unobserved scale heterogeneity). The results reveal a number of benefits associated with this type of approach, particularly when heterosckedasticity can be linked to observed characteristics of the respondent. Our data comes from a discrete choice experiment eliciting recreational users preferences for farmland walking trails in Ireland

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File URL: http://purl.umn.edu/148833
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Bibliographic Info

Paper provided by Socio-Economic Marine Research Unit, National University of Ireland, Galway in its series Working Papers with number 148833.

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Date of creation: 2012
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Handle: RePEc:ags:semrui:148833

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Web page: http://www.nuigalway.ie/semru/index.html
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Keywords: Heterogeneity; Heteroskedasticity; Environmental Economics and Policy; Research Methods/ Statistical Methods;

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  1. Morey, Edward R., 1981. "The demand for site-specific recreational activities: A characteristics approach," Journal of Environmental Economics and Management, Elsevier, vol. 8(4), pages 345-371, December.
  2. Stephen Hynes & Nick Hanley & Riccardo Scarpa, 2008. "Effects on Welfare Measures of Alternative Means of Accounting for Preference Heterogeneity in Recreational Demand Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 1011-1027.
  3. Joffre Swait, 2006. "Commentary on Econometric Modeling Strategies for Stated Preference Experiments By David Layton," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(1), pages 87-90, 05.
  4. Riccardo Scarpa & Mara Thiene, 2005. "Destination Choice Models for Rock Climbing in the Northeastern Alps: A Latent-Class Approach Based on Intensity of Preferences," Land Economics, University of Wisconsin Press, vol. 81(3).
  5. Scarpa, Riccardo & Ruto, Eric S. K. & Kristjanson, Patti & Radeny, Maren & Drucker, Adam G. & Rege, John E. O., 2003. "Valuing indigenous cattle breeds in Kenya: an empirical comparison of stated and revealed preference value estimates," Ecological Economics, Elsevier, vol. 45(3), pages 409-426, July.
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