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Understanding Heterogeneous Preferences in Random Utility Models: A Latent Class Approach

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  • Peter Boxall

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  • Wiktor Adamowicz

Abstract

A finite mixture approach toconditional logit models is developed in whichlatent classes are used to promoteunderstanding of systematic heterogeneity. The model is applied to wilderness recreationin which a branded choice experiment involvingchoice of one park from a demand system wasadministered to a sample of recreationists. The basis of membership in the classes orsegments in the sample involved attitudinalmeasures of motivations for taking a trip, aswell as their stated preferences overwilderness park attributes. The econometricanalysis suggested that four classes of peopleexist in the sample. Using the model toexamine welfare measures of some hypotheticalpolicy changes identified markedly differentwelfare effects than the standard singlesegment model, and provided insight into thedifferential impact of alternative policies. Copyright Kluwer Academic Publishers 2002

Suggested Citation

  • Peter Boxall & Wiktor Adamowicz, 2002. "Understanding Heterogeneous Preferences in Random Utility Models: A Latent Class Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(4), pages 421-446, December.
  • Handle: RePEc:kap:enreec:v:23:y:2002:i:4:p:421-446
    DOI: 10.1023/A:1021351721619
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    References listed on IDEAS

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    7. Hanemann, W. Michael, 1982. "Applied Welfare Analysis with Qualitative Response Models," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7982f0k8, Department of Agricultural & Resource Economics, UC Berkeley.
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    9. Schmidt, Peter & Strauss, Robert P, 1975. "The Prediction of Occupation Using Multiple Logit Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(2), pages 471-486, June.
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    11. I Salomon & M Ben-Akiva, 1983. "The use of the life-style concept in travel demand models," Environment and Planning A, Pion Ltd, London, vol. 15(5), pages 623-638, May.
    12. Boxall, Peter C. & Adamowicz, Wiktor L., 1999. "Understanding Heterogeneous Preferences in Random Utility Models: The Use of Latent Class Analysis," Staff Paper Series 24090, University of Alberta, Department of Resource Economics and Environmental Sociology.
    13. Hanemann, W. Michael, 1982. "Applied Welfare Analysis with Qualitative Response Models," CUDARE Working Papers 7160, University of California, Berkeley, Department of Agricultural and Resource Economics.
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