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A New Approach to Random Utility Modeling using the Dirichlet Multinomial Distribution

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  • J. Shonkwiler
  • Nick Hanley

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Abstract

In this paper we introduce a new econometricapproach to analyzing recreational site choicedata, the Dirichlet multinomial model. Thismodel, which nests the standard conditionalmultinomial logit model, can accommodateover-dispersed data and may provide moreefficient estimators of coefficients andconsequent welfare measures than the standardconditional logit model, which is so widelyused in the Random Utility Model approach torecreation demand. We illustrate thisDirichlet approach using a data set of rockclimbers in Scotland, and study the impacts onper-trip consumers surplus of alternativemanagement strategies for popular rock climbingsites. Results show that the Dirichletmultinomial approach produces coefficient andwelfare estimates having smaller samplingvariability in this case. We also compareclassical welfare measures with their posteriorequivalents, which allow for welfare changes tobe dis-aggregated. Copyright Kluwer Academic Publishers 2003

Suggested Citation

  • J. Shonkwiler & Nick Hanley, 2003. "A New Approach to Random Utility Modeling using the Dirichlet Multinomial Distribution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(3), pages 401-416, November.
  • Handle: RePEc:kap:enreec:v:26:y:2003:i:3:p:401-416
    DOI: 10.1023/B:EARE.0000003597.88521.24
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    File URL: http://hdl.handle.net/10.1023/B:EARE.0000003597.88521.24
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    References listed on IDEAS

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    1. Gourieroux, Christian & Monfort, Alain & Trognon, Alain, 1984. "Pseudo Maximum Likelihood Methods: Theory," Econometrica, Econometric Society, vol. 52(3), pages 681-700, May.
    2. Nick Hanley & Robert Wright & Gary Koop, 2002. "Modelling Recreation Demand Using Choice Experiments: Climbing in Scotland," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(3), pages 449-466, July.
    3. Shaw, W. Douglass & Jakus, Paul M., 1996. "Travel Cost Models Of The Demand For Rock Climbing," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 25(2), October.
    4. Nick Hanley & Gary Koop & Begoña Álvarez-Farizo & Robert E. Wright & Ceara Nevin, 2001. "Go climb a mountain: an application of recreation demand modelling to rock climbing in Scotland," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(1), pages 36-52.
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    Citations

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    Cited by:

    1. Paulo Guimaraes & Richard Lindrooth, 2005. "Dirichlet-Multinomial Regression," Econometrics 0509001, EconWPA.
    2. Klaus Moeltner & J. Scott Shonkweiler, 2007. "Intercept and Recall: Examining Avidity Carryover in On-Site Collected Travel Data," Working Papers 07-014, University of Nevada, Reno, Department of Economics;University of Nevada, Reno , Department of Resource Economics.
    3. Englin, Jeffrey E. & McDonald, Jered M. & Moeltner, Klaus, 2006. "Valuing ancient forest ecosystems: An analysis of backcountry hiking in Jasper National Park," Ecological Economics, Elsevier, vol. 57(4), pages 665-678, June.
    4. Siikamäki, Juha & Layton, David, 2005. "Incentive Payment Programs for Environmental Protection: A Framework for Eliciting and Estimating Landowners' Willingness to Participate," Discussion Papers dp-05-57, Resources For the Future.
    5. Danielle Hagerty & Klaus Moeltner, 2005. "Specification of Driving Costs in Models of Recreation Demand," Land Economics, University of Wisconsin Press, vol. 81(1).

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