IDEAS home Printed from https://ideas.repec.org/a/oup/ajagec/v85y2003i1p248-253.html
   My bibliography  Save this article

A Simple Method of Incorporating Income Effects into Logit and Nested-Logit Models: Theory and Application

Author

Listed:
  • Anders Karlstrom

Abstract

Substantive income effects are incorporated in a logit or nested-logit model by assuming that utility is a piece-wise linear spline function of residual income. Specific income data are not required, only income by category. Expected compensating variation is easily and accurately approximated by the difference between expected maximum utility in the proposed and initial state, multiplied by the inverse of the individual's initial marginal utility of money. This approximation is almost exact because although any policy can, in theory, cause an individual to jump income categories, for most policies this probability will be very small. Copyright 2003, Oxford University Press.

Suggested Citation

  • Anders Karlstrom, 2003. "A Simple Method of Incorporating Income Effects into Logit and Nested-Logit Models: Theory and Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 248-253.
  • Handle: RePEc:oup:ajagec:v:85:y:2003:i:1:p:248-253
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/1467-8276.00116
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

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


    Cited by:

    1. Golub, Aaron David, 2003. "Welfare Analysis of Informal Transit Services in Brazil and the Effects of Regulation," University of California Transportation Center, Working Papers qt0pf40632, University of California Transportation Center.
    2. Mitsunobu Miyake, 2010. "Convergence theorems of willingness-to-pay and willingness-to-accept for nonmarket goods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 34(4), pages 549-570, April.
    3. Scarpa Riccardo & Thiene Mara & Marangon Francesco, 2007. "The Value of Collective Reputation for Environmentally-Friendly Production Methods: The Case of Val di Gresta," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(1), pages 1-28, September.
    4. Golub, Aaron David, 2003. "Welfare Analysis of Informal Transit Services in Brazil and the Effects of Regulation," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt4z3826fg, Institute of Transportation Studies, UC Berkeley.
    5. Westerberg, Vanja Holmquist & Lifran, Robert & Olsen, Søren Bøye, 2010. "To restore or not? A valuation of social and ecological functions of the Marais des Baux wetland in Southern France," Ecological Economics, Elsevier, vol. 69(12), pages 2383-2393, October.
    6. Aaron Golub & Ronaldo Balassiano & Ayres Araújo & Eric Ferreira, 2009. "Regulation of the informal transport sector in Rio de Janeiro, Brazil: welfare impacts and policy analysis," Transportation, Springer, vol. 36(5), pages 601-616, September.
    7. Hwa Nyeon Kim & W. Douglass Shaw & Richard T. Woodward, 2007. "The Distributional Impacts of Recreational Fees: A Discrete Choice Model with Incomplete Data," Land Economics, University of Wisconsin Press, vol. 83(4), pages 561-574.
    8. Donna Dosman & Wiktor Adamowicz, 2006. "Combining Stated and Revealed Preference Data to Construct an Empirical Examination of Intrahousehold Bargaining," Review of Economics of the Household, Springer, vol. 4(1), pages 15-34, March.
    9. Termansen, Mette & Zandersen, Marianne & McClean, Colin J., 2008. "Spatial substitution patterns in forest recreation," Regional Science and Urban Economics, Elsevier, vol. 38(1), pages 81-97, January.
    10. Phaneuf, Daniel J. & Smith, V. Kerry, 2006. "Recreation Demand Models," Handbook of Environmental Economics,in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 15, pages 671-761 Elsevier.
    11. Nahmias–Biran, Bat-hen & Shiftan, Yoram, 2016. "Towards a more equitable distribution of resources: Using activity-based models and subjective well-being measures in transport project evaluation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 672-684.
    12. J.M.C. Santos Silva, 2004. "Deriving welfare measures in discrete choice experiments: a comment to Lancsar and Savage (2)," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 913-918.
    13. Abidoye, Babatunde Oluwakayode, 2010. "Bayesian inference in modeling recreation demand," ISU General Staff Papers 201001010800002496, Iowa State University, Department of Economics.
    14. Yang, Jui-Chen & Pattanayak, Subhrendu K. & Jonson, F. Reed & Mansfield, Carol & van den Berg, Caroline & Jones, Kelly, 2006. "Unpackaging demand for water service quality : evidence from conjoint surveys in Sri Lanka," Policy Research Working Paper Series 3817, The World Bank.
    15. Van Loo, Ellen J. & Caputo, Vincenzina & Nayga, Rodolfo M. & Verbeke, Wim, 2014. "Consumers’ valuation of sustainability labels on meat," Food Policy, Elsevier, vol. 49(P1), pages 137-150.
    16. Scarpa, Riccardo & Thiene, Mara & Marangon, Francesco, 2006. "Consumer's WTP for Environment-Friendly Production Methods and Collective Reputation for Place of Origin: The Case of Val di Gresta's Carrots," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25637, International Association of Agricultural Economists.
    17. Edward Morey & Kathleen Greer Rossmann, 2003. "Using Stated-Preference Questions to Investigate Variations in Willingness to Pay for Preserving Marble Monuments: Classic Heterogeneity, Random Parameters, and Mixture Models," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 27(3), pages 215-229, November.

    More about this item

    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:oup:ajagec:v:85:y:2003:i:1:p:248-253. 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: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/aaeaaea.html .

    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.

    We have no references for this item. You can help adding them by using 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.