Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Impact Of The Before-After Error Term Correlation On Welfare Measurement In Logit

Contents:

Author Info

  • Paolo Delle Site

    (La Sapienza University)

  • Marco Valerio Salucci

    (La Sapienza University)

Abstract

We consider random utility models with independent and identical type I extreme value distribution of the error terms. To compute the expectation of the compensating variation it is necessary to consider the correlation of the error terms between the state before the price and quality change and the state after. We investigate the impact of the before-after correlation of the error terms on the expectation of the compensating variation. We consider each error term to be correlated between the before state and the after state independently and identically across alternatives. We prove the theoretical property that in the case without income effect the logsum formula holds for any assumption on the before-after correlation. We use numerical evidence to show that in the case with income effect the variability of the expectation of the compensating variation with the assumption on the before-after correlation increases with the size of the income effect.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://host.uniroma3.it/centri/crei/pubblicazioni/workingpapers2012/CREI_04_2012.pdf
File Function: First version, 2012
Download Restriction: no

Bibliographic Info

Paper provided by CREI Università degli Studi Roma Tre in its series Working Papers with number 0412.

as in new window
Length: 15 pages
Date of creation: 2012
Date of revision: 2012
Handle: RePEc:rcr:wpaper:04_12

Contact details of provider:
Postal: Via Ostiense, 161, 00154 ROMA
Phone: 06.57067248
Email:
Web page: http://host.uniroma3.it/centri/crei/
More information through EDIRC

Related research

Keywords: logit; compensating variation; before-after correlation; income effect;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. repec:bla:restud:v:72:y:2005:i:1:p:57-76 is not listed on IDEAS
  2. Laurie Garrow & Tudor Bodea & Misuk Lee, 2010. "Generation of synthetic datasets for discrete choice analysis," Transportation, Springer, vol. 37(2), pages 183-202, March.
  3. André Palma & Karim Kilani, 2011. "Transition choice probabilities and welfare analysis in additive random utility models," Economic Theory, Springer, vol. 46(3), pages 427-454, April.
  4. Jara-Díaz, Sergio R. & Videla, Jorge, 1989. "Detection of income effect in mode choice: Theory and application," Transportation Research Part B: Methodological, Elsevier, vol. 23(6), pages 393-400, December.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:rcr:wpaper:04_12. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Francesca Vaino).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.