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Combining discrete and continuous representations of preference heterogeneity: a latent class approach

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Author Info

  • Angel Bujosa Bestard

    ()
    (Centre de Recerca Econòmica (UIB · Sa Nostra))

  • Antoni Riera Font

    ()
    (Centre de Recerca Econòmica (UIB · Sa Nostra))

  • Robert L. Hicks

    ()
    (The College of William and Mary)

Abstract

This paper investigates heterogeneity in preferences for forest recreators in Mallorca, Spain. We develop a latent class approach combining discrete and continuous representations of tastes and compare it with the conventional latent class and random parameter logit approaches. We investigate the performance of the discrete-continuous model by comparing welfare estimates and predictive accuracy. The discrete-continuous model outperforms latent class and mixed logit approaches when comparing goodness-of-fit and in- sample site-choice forecasts. We find that the discrete-continuous model for preference heterogeneity reveals variation among individuals' preferences and WTP, and for some policy changes our results reveal striking differences in means and distributions of WTP.

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Bibliographic Info

Paper provided by Centre de Recerca Econòmica (UIB ·"Sa Nostra") in its series CRE Working Papers (Documents de treball del CRE) with number 2009/2.

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Length: 22 pages
Date of creation: 2009
Date of revision:
Publication status: Published in 'Documents de Treball CRE', 2009, pages 1-22
Handle: RePEc:pdm:wpaper:2009/2

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Web page: http://www.cre.sanostra.es

Related research

Keywords: Travel Cost Method; latent class model; random parameter model; recreation demand; forests;

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Citations

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Cited by:
  1. Xiong, Yingge & Mannering, Fred L., 2013. "The heterogeneous effects of guardian supervision on adolescent driver-injury severities: A finite-mixture random-parameters approach," Transportation Research Part B: Methodological, Elsevier, vol. 49(C), pages 39-54.
  2. Yoo, James & Ready, Richard C., 2014. "Preference heterogeneity for renewable energy technology," Energy Economics, Elsevier, vol. 42(C), pages 101-114.
  3. Stephane Hess & Amanda Stathopoulos & Danny Campbell & Vikki O’Neill & Sebastian Caussade, 2013. "It’s not that I don’t care, I just don’t care very much: confounding between attribute non-attendance and taste heterogeneity," Transportation, Springer, vol. 40(3), pages 583-607, May.
  4. Speelman, Stijn & Veettil, Prakashan Chellattan, 2013. "Heterogeneous preferences for water rights reforms among smallholder irrigators in South Africa," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), issue 2, August.
  5. Hackbarth, André & Madlener, Reinhard, 2013. "Willingness-to-Pay for Alternative Fuel Vehicle Characteristics: A Stated Choice Study for Germany," FCN Working Papers 20/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  6. Crabbe, M. & Vandebroek, M., 2012. "Improving the efficiency of individualized designs for the mixed logit choice model by including covariates," Computational Statistics & Data Analysis, Elsevier, vol. 56(6), pages 2059-2072.
  7. Boeri, Marco & Scarpa, Riccardo & Chorus, Caspar G., 2014. "Stated choices and benefit estimates in the context of traffic calming schemes: Utility maximization, regret minimization, or both?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 121-135.
  8. Doherty, Edel & Campbell, Danny & Hynes, Stephen, 2012. "Exploring cost heterogeneity in recreational demand," Working Papers 148832, Socio-Economic Marine Research Unit, National University of Ireland, Galway.
  9. Maria Cunha-e-Sá & Lívia Madureira & Luis Nunes & Vladimir Otrachshenko, 2012. "Protesting and Justifying: A Latent Class Model for Contingent Valuation with Attitudinal Data," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 52(4), pages 531-548, August.
  10. Cunha-e-Sa, Maria Antonieta & Madureira, Livia & Nunes, Luis Catela & Otrachshenko, Vladimir, 2010. "Protesting or Justifying? A Latent Class Model for Contingent Valuation with Attitudinal Data," FEUNL Working Paper Series wp547, Universidade Nova de Lisboa, Faculdade de Economia.
  11. David Hensher & Andrew Collins & William Greene, 2013. "Accounting for attribute non-attendance and common-metric aggregation in a probabilistic decision process mixed multinomial logit model: a warning on potential confounding," Transportation, Springer, vol. 40(5), pages 1003-1020, September.

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