IDEAS home Printed from https://ideas.repec.org/a/ags/jlaare/30884.html
   My bibliography  Save this article

The Decision Of When To Buy A Frequently Purchased Good: A Multi-Period Probit Model

Author

Listed:
  • Gould, Brian W.
  • Dong, Diansheng

Abstract

Increased availability of scanner-based panel data has enabled researchers to better understand nondurable commodity purchase dynamics. In this study, we focus on one component of the purchase process--when to buy. The relationship between the discrete purchase decision and a set of household and purchase characteristics is quantified using a simulated maximum-likelihood procedure. Given the longitudinal nature of our data, unobserved heterogeneity is addressed by adopting an auto-correlated error structure. Our empirical application is household purchases of cheese. We find evidence of significant persistent unobservable household heterogeneity, which is not eliminated by the inclusion of lagged exogenous variables.

Suggested Citation

  • Gould, Brian W. & Dong, Diansheng, 2000. "The Decision Of When To Buy A Frequently Purchased Good: A Multi-Period Probit Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-17, December.
    • Handle: RePEc:ags:jlaare:30884
    DOI: 10.22004/ag.econ.30884
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/30884/files/25020636.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.30884?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Borsch-Supan, Axel & Hajivassiliou, Vassilis A., 1993. "Smooth unbiased multivariate probability simulators for maximum likelihood estimation of limited dependent variable models," Journal of Econometrics, Elsevier, vol. 58(3), pages 347-368, August.
    2. Axel Borsch-Supan & Vassilis Hajivassiliou & Laurence J. Kotlikoff, 1992. "Health, Children, and Elderly Living Arrangements: A Multiperiod-Multinomial Probit Model with Unobserved Heterogeneity and Autocorrelated Errors," NBER Chapters, in: Topics in the Economics of Aging, pages 79-108, National Bureau of Economic Research, Inc.
    3. David A. Wise, 1992. "Topics in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise92-1, July.
    4. Vicki A. McCracken & Jon A. Brandt, 1987. "Household Consumption of Food-Away-From-Home: Total Expenditure and by Type of Food Facility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 274-284.
    5. McFadden, Daniel, 1989. "A Method of Simulated Moments for Estimation of Discrete Response Models without Numerical Integration," Econometrica, Econometric Society, vol. 57(5), pages 995-1026, September.
    6. Vassilis A. Hajivassiliou & Daniel McFadden, 1990. "The Method of Simulated Scores for the Estimation of LDV Models with an Application to External Debt Crisis," Cowles Foundation Discussion Papers 967, Cowles Foundation for Research in Economics, Yale University.
    7. Peter M. Guadagni & John D. C. Little, 1983. "A Logit Model of Brand Choice Calibrated on Scanner Data," Marketing Science, INFORMS, vol. 2(3), pages 203-238.
    8. Terry Elrod, 1988. "Choice Map: Inferring a Product-Market Map from Panel Data," Marketing Science, INFORMS, vol. 7(1), pages 21-40.
    9. Brian W. Gould, 1992. "At-Home Consumption of Cheese: A Purchase-Infrequency Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(2), pages 453-459.
    10. Folkes, Valerie S & Martin, Ingrid M & Gupta, Kamal, 1993. "When to Say When: Effects of Supply on Usage," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 20(3), pages 467-477, December.
    11. Huang, Chung L. & Raunikar, Robert, 1983. "Household Fluid Milk Expenditure Patterns In The South And United States," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 15(2), pages 1-7, December.
    12. Steven T. Yen & Andrew M. Jones, 1997. "Household Consumption of Cheese: An Inverse Hyperbolic Sine Double-Hurdle Model with Dependent Errors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 246-251.
    13. Hajivassiliou, Vassilis A. & Ruud, Paul A., 1986. "Classical estimation methods for LDV models using simulation," Handbook of Econometrics, in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 40, pages 2383-2441, Elsevier.
    14. Steckel, Joel H & Vanhonacker, Wilfried R, 1988. "A Heterogeneous Conditional Logit Model of Choice," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(3), pages 391-398, July.
    15. Erdem, Tulin & Keane, Michael P. & Sun, Baohong, 1998. "Missing price and coupon availability data in scanner panels: Correcting for the self-selection bias in choice model parameters," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 177-196, November.
    16. Vassilis A. Hajivassiliou & Daniel L. McFadden, 1998. "The Method of Simulated Scores for the Estimation of LDV Models," Econometrica, Econometric Society, vol. 66(4), pages 863-896, July.
    17. Geweke, John F. & Keane, Michael P. & Runkle, David E., 1997. "Statistical inference in the multinomial multiperiod probit model," Journal of Econometrics, Elsevier, vol. 80(1), pages 125-165, September.
    18. Deaton, Angus, 1987. "Estimation of own- and cross-price elasticities from household survey data," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 7-30.
    19. Hajivassiliou, V A, 1994. "A Simulation Estimation Analysis of the External Debt Crises of Developing Countries," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(2), pages 109-131, April-Jun.
    20. McFadden, Daniel & Ruud, Paul A, 1994. "Estimation by Simulation," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 591-608, November.
    21. Huang, Chung L. & Raunikar, Robert, 1983. "Household Fluid Milk Expenditure Patterns in the South and United States," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 15(2), pages 27-33, December.
    22. Dipak C. Jain & Naufel J. Vilcassim, 1991. "Investigating Household Purchase Timing Decisions: A Conditional Hazard Function Approach," Marketing Science, INFORMS, vol. 10(1), pages 1-23.
    23. J. Morgan Jones & Jane T. Landwehr, 1988. "Removing Heterogeneity Bias from Logit Model Estimation," Marketing Science, INFORMS, vol. 7(1), pages 41-59.
    24. Hajivassiliou, Vassilis & McFadden, Daniel & Ruud, Paul, 1996. "Simulation of multivariate normal rectangle probabilities and their derivatives theoretical and computational results," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 85-134.
    25. Murphy, Patrick E & Staples, William A, 1979. "A Modernized Family Life Cycle," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 6(1), pages 12-22, June.
    26. Keane, Michael P, 1994. "A Computationally Practical Simulation Estimator for Panel Data," Econometrica, Econometric Society, vol. 62(1), pages 95-116, January.
    27. Thomas L. Cox & Michael K. Wohlgenant, 1986. "Prices and Quality Effects in Cross-Sectional Demand Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(4), pages 908-919.
    28. McCulloch, Robert & Rossi, Peter E., 1994. "An exact likelihood analysis of the multinomial probit model," Journal of Econometrics, Elsevier, vol. 64(1-2), pages 207-240.
    29. Gould, Brian W. & Lin, Huei Chin, 1994. "Nutrition Information And Household Dietary Fat Intake," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(2), pages 1-17, December.
    30. João L. Assunção & Robert J. Meyer, 1993. "The Rational Effect of Price Promotions on Sales and Consumption," Management Science, INFORMS, vol. 39(5), pages 517-535, May.
    31. Geweke, John & Keane, Michael P & Runkle, David, 1994. "Alternative Computational Approaches to Inference in the Multinomial Probit Model," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 609-632, November.
    32. Brian W. Gould & Jorge Cornick & Thomas Cox, 1994. "Consumer Demand for New Reduced-fat Foods: An Analysis of Cheese Expenditures," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 42(3), pages 367-380, November.
    33. Tülin Erdem & Michael P. Keane, 1996. "Decision-Making Under Uncertainty: Capturing Dynamic Brand Choice Processes in Turbulent Consumer Goods Markets," Marketing Science, INFORMS, vol. 15(1), pages 1-20.
    34. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    35. Diansheng Dong & J.S. Shonkwiler & Oral Capps, 1998. "Estimation of Demand Functions Using Cross-Sectional Household Data: The Problem Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 466-473.
    36. Julie A. Nelson, 1991. "Quality Variation and Quantity Aggregation in Consumer Demand for Food," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1204-1212.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dong, Diansheng & Chung, Chanjin & Kaiser, Harry M., 2001. "Panel Data Double-Hurdle Model: An Application To Dairy Advertising," 2001 Annual meeting, August 5-8, Chicago, IL 20502, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Munroe, Darla K. & Southworth, Jane & Tucker, Catherine M., 2001. "The Dynamics Of Land-Cover Change In Western Honduras: Spatial Autocorrelation And Temporal Variation," 2001 Annual meeting, August 5-8, Chicago, IL 20759, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Abdulfatah Sheikhbihi Adam & Sinne Smed, 2012. "The effects of different types of taxes on soft-drink consumption," IFRO Working Paper 2012/9, University of Copenhagen, Department of Food and Resource Economics, revised Nov 2012.
    4. Todd M. Schmit & Brian W. Gould & Diansheng Dong & Harry M. Kaiser & Chanjin Chung, 2003. "The Impact of Generic Advertising on U.S. Household Cheese Purchases: A Censored Autocorrelated Regression Approach," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 51(1), pages 15-37, March.
    5. Gardebroek, Cornelis & Oude Lansink, Alfons G.J.M., 2008. "Dynamic Microeconometric Approaches To Analysing Agricultural Policy," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6592, European Association of Agricultural Economists.
    6. Schmit, Todd M. & Dong, Diansheng & Chung, Chanjin & Kaiser, Harry M. & Gould, Brian W., 2002. "Identifying The Effects Of Generic Advertising On The Household Demand For Fluid Milk And Cheese: A Two-Step Panel Data Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(01), pages 1-22, July.
    7. Munroe, Darla K. & Southworth, Jane & Tucker, Catherine M., 2002. "The dynamics of land-cover change in western Honduras: exploring spatial and temporal complexity," Agricultural Economics, Blackwell, vol. 27(3), pages 355-369, November.
    8. Huang, Min-Hsin & Hahn, David E. & Jones, Eugene, 2004. "Determinants Of Price Elasticities For Store Brands And National Brands Of Cheese," 2004 Annual meeting, August 1-4, Denver, CO 20235, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Astrid Jonas & Jutta Roosen, 2008. "Demand for milk labels in Germany: organic milk, conventional brands, and retail labels," Agribusiness, John Wiley & Sons, Ltd., vol. 24(2), pages 192-206.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Ackerberg, 2009. "A new use of importance sampling to reduce computational burden in simulation estimation," Quantitative Marketing and Economics (QME), Springer, vol. 7(4), pages 343-376, December.
    2. Inkmann, Joachim, 2000. "Misspecified heteroskedasticity in the panel probit model: A small sample comparison of GMM and SML estimators," Journal of Econometrics, Elsevier, vol. 97(2), pages 227-259, August.
    3. Dong, Diansheng & Chung, Chanjin & Kaiser, Harry M., 2001. "Panel Data Double-Hurdle Model: An Application To Dairy Advertising," 2001 Annual meeting, August 5-8, Chicago, IL 20502, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Ziegler, Andreas, 2001. "Simulated z-tests in multinomial probit models," ZEW Discussion Papers 01-53, ZEW - Leibniz Centre for European Economic Research.
    5. Kerem Tuzcuoglu, 2019. "Composite Likelihood Estimation of an Autoregressive Panel Probit Model with Random Effects," Staff Working Papers 19-16, Bank of Canada.
    6. Maruyama, Shiko, 2014. "Estimation of finite sequential games," Journal of Econometrics, Elsevier, vol. 178(2), pages 716-726.
    7. Dong, Diansheng & Schmit, Todd M. & Kaiser, Harry M., 2003. "Modeling the Household Purchasing Process Using a Panel Data Tobit Model," Research Bulletins 122115, Cornell University, Department of Applied Economics and Management.
    8. Lee, Lung-Fei, 1997. "Simulated maximum likelihood estimation of dynamic discrete choice statistical models some Monte Carlo results," Journal of Econometrics, Elsevier, vol. 82(1), pages 1-35.
    9. Andreas Ziegler, 2007. "Simulated classical tests in multinomial probit models," Statistical Papers, Springer, vol. 48(4), pages 655-681, October.
    10. Diansheng Dong & Chanjin Chung & Harry Kaiser, 2004. "Modelling milk purchasing behaviour with a panel data double-hurdle model," Applied Economics, Taylor & Francis Journals, vol. 36(8), pages 769-779.
    11. Vassilis Argyrou Hajivassiliou, 1993. "Simulating Normal Rectangle Probabilities and Their Derivatives: The Effects of Vectorization," Working Papers _025, Yale University.
    12. Prowse, Victoria L., 2005. "State Dependence in a Multi-State Model of Employment Dynamics," IZA Discussion Papers 1623, Institute of Labor Economics (IZA).
    13. Ziegler, Andreas, 2002. "Simulated Classical Tests in the Multiperiod Multinomial Probit Model," ZEW Discussion Papers 02-38, ZEW - Leibniz Centre for European Economic Research.
    14. Hajivassiliou, Vassilis A. & Ruud, Paul A., 1986. "Classical estimation methods for LDV models using simulation," Handbook of Econometrics, in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 40, pages 2383-2441, Elsevier.
    15. Andreas Ziegler, 2010. "Individual Characteristics and Stated Preferences for Alternative Energy Sources and Propulsion Technologies in Vehicles: A Discrete Choice Analysis," CER-ETH Economics working paper series 10/125, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    16. Chintagunta, Pradeep & Kyriazidou, Ekaterini & Perktold, Josef, 2001. "Panel data analysis of household brand choices," Journal of Econometrics, Elsevier, vol. 103(1-2), pages 111-153, July.
    17. Michael P. Keane, 2013. "Panel data discrete choice models of consumer demand," Economics Papers 2013-W08, Economics Group, Nuffield College, University of Oxford.
    18. Ziegler Andreas, 2010. "Z-Tests in Multinomial Probit Models under Simulated Maximum Likelihood Estimation: Some Small Sample Properties," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(5), pages 630-652, October.
    19. Victoria Prowse, 2005. "State Dependence in a Multi-state Model of Employment," Economics Papers 2005-W20, Economics Group, Nuffield College, University of Oxford.
    20. Rinus Haaijer & Michel Wedel & Marco Vriens & Tom Wansbeek, 1998. "Utility Covariances and Context Effects in Conjoint MNP Models," Marketing Science, INFORMS, vol. 17(3), pages 236-252.

    More about this item

    Keywords

    Agribusiness;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:jlaare:30884. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/waeaaea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.