IDEAS home Printed from https://ideas.repec.org/a/jae/japmet/v21y2006i2p227-244.html
   My bibliography  Save this article

Measuring welfare effects in models with random coefficients

Author

Listed:
  • Erik Meijer

    (Department of Econometrics, University of Groningen, PO Box 800, 9700 AV Groningen, The Netherlands)

  • Jan Rouwendal

    (Department of Economics of Consumers and Households, Wageningen University, PO Box 8130, 6700 EW Wageningen, The Netherlands)

Abstract

In economic research, it is often important to express the marginal value of a variable in monetary terms. In random coefficient models, this marginal monetary value is the ratio of two random coefficients and is thus random itself. In this paper, we study the distribution of this ratio and particularly the consequences of different distributional assumptions about the coefficients. It is shown that important characteristics of the distribution of the marginal monetary value may be sensitive to the distributional assumptions about the random coefficients. The median, however, is much less sensitive than the mean. Copyright © 2006 John Wiley & Sons, Ltd.

Suggested Citation

  • Erik Meijer & Jan Rouwendal, 2006. "Measuring welfare effects in models with random coefficients," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(2), pages 227-244.
  • Handle: RePEc:jae:japmet:v:21:y:2006:i:2:p:227-244
    DOI: 10.1002/jae.841
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/jae.841
    File Function: Link to full text; subscription required
    Download Restriction: no

    File URL: http://qed.econ.queensu.ca:80/jae/2006-v21.2/
    File Function: Supporting data files and programs
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gallant, Ronald & Tauchen, George, 1989. "Seminonparametric Estimation of Conditionally Constrained Heterogeneous Processes: Asset Pricing Applications," Econometrica, Econometric Society, vol. 57(5), pages 1091-1120, September.
    2. Hausman, Jerry A & Wise, David A, 1978. "A Conditional Probit Model for Qualitative Choice: Discrete Decisions Recognizing Interdependence and Heterogeneous Preferences," Econometrica, Econometric Society, vol. 46(2), pages 403-426, March.
    3. Erik Meijer & Jan Rouwendal, 2006. "Measuring welfare effects in models with random coefficients," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(2), pages 227-244.
    4. Hogg, Robert V. & Klugman, Stuart A., 1983. "On the estimation of long tailed skewed distributions with actuarial applications," Journal of Econometrics, Elsevier, vol. 23(1), pages 91-102, September.
    5. 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.
    6. Gallant, A Ronald & Nychka, Douglas W, 1987. "Semi-nonparametric Maximum Likelihood Estimation," Econometrica, Econometric Society, vol. 55(2), pages 363-390, March.
    7. Spanos,Aris, 1986. "Statistical Foundations of Econometric Modelling," Cambridge Books, Cambridge University Press, number 9780521269124, August.
    8. Kim, Byung-Do & Blattberg, Robert C & Rossi, Peter E, 1995. "Modeling the Distribution of Price Sensitivity and Implications for Optimal Retail Pricing," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(3), pages 291-303, July.
    9. Hensher, David & Louviere, Jordan & Swait, Joffre, 1998. "Combining sources of preference data," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 197-221, November.
    10. David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
    11. Ben-Akiva, M. & Bolduc, D. & Bradley, M., 1993. "Estimation of Travel Choice Models with Randomly Distributed Values of Time," Papers 9303, Laval - Recherche en Energie.
    12. Kenneth E. Train, 1998. "Recreation Demand Models with Taste Differences over People," Land Economics, University of Wisconsin Press, vol. 74(2), pages 230-239.
    13. Elrod, Terry & Keane, Michael, 1995. "A Factor-Analytic Probit Model for Representing the Market Structure in Panel Data," MPRA Paper 52434, University Library of Munich, Germany.
    14. repec:dgr:rugsom:00f25 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. Measuring welfare effects in models with random coefficients (JAE 2006) in ReplicationWiki

    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:jae:japmet:v:21:y:2006:i:2:p:227-244. 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: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://www.interscience.wiley.com/jpages/0883-7252/ .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.