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Scale Heterogeneity and Its Implications for Discrete Choice Analysis

Author

Listed:
  • Katrina J. Davis
  • Michael Burton
  • Marit E. Kragt

Abstract

This paper shows how researchers can make incorrect interpretations of models that include heterogeneity in error variance (scale) if they do not recognize the implications of parameter estimates being conflated with scale. The research contribution is to define best practice management of scale heterogeneity in discrete choice experiments and to empirically demonstrate issues that arise when best practice is ignored. We illustrate the problem using data from two discrete choice experiments, showing that reported parameters vary due to arbitrary normalization decisions. We report examples of papers where authors fall into this trap, potentially leading to erroneous evaluation of models.

Suggested Citation

  • Katrina J. Davis & Michael Burton & Marit E. Kragt, 2019. "Scale Heterogeneity and Its Implications for Discrete Choice Analysis," Land Economics, University of Wisconsin Press, vol. 95(3), pages 353-368.
    • Handle: RePEc:uwp:landec:v:95:y:2019:i:3:p:353-368
    Note: DOI: 10.3368/le.95.3.353
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    File URL: http://le.uwpress.org/cgi/reprint/95/3/353
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    Citations

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    Cited by:

    1. Adelina Gschwandtner & Jose Eduardo Ribeiro & Cesar Revoredo-Giha & Michael Burton, 2021. "Combining Stated and Revealed Preferences for valuing Organic Chicken Meat," Studies in Economics 2113, School of Economics, University of Kent.
    2. Estifanos, Tafesse Kefyalew & Polyakov, Maksym & Pandit, Ram & Hailu, Atakelty & Burton, Michael, 2020. "Managing conflicts between local land use and the protection of the Ethiopian wolf: Residents’ preferences for conservation program design features," Ecological Economics, Elsevier, vol. 169(C).
    3. Riegel, Simone & Kuhfuss, Laure & Stojanovic, Timothy, 2023. "Nature-based solutions for climate change mitigation: Assessing the Scottish Public's preferences for saltmarsh carbon storage," Ecological Economics, Elsevier, vol. 211(C).
    4. Bougherara, Douadia & Lapierre, Margaux & Préget, Raphaële & Sauquet, Alexandre, 2021. "Do farmers prefer increasing, decreasing, or stable payments in Agri-environmental schemes?," Ecological Economics, Elsevier, vol. 183(C).
    5. Bougherara, Douadia & Lapierre, Margaux & Préget, Raphaële & Sauquet, Alexandre, 2021. "Do farmers prefer increasing, decreasing, or stable payments in Agri-environmental schemes?," Ecological Economics, Elsevier, vol. 183(C).
    6. Elsa Varela & Zein Kallas, 2022. "Societal preferences for the conservation of traditional pig breeds and their agroecosystems: Addressing preference heterogeneity and protest responses through deterministic allocation and scale‐exten," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(3), pages 761-788, September.
    7. Yanling Peng & Yuansheng Jiang & Yu Hong, 2022. "Heterogeneous Preferences for Selecting Attributes of Farmland Management Right Mortgages in Western China: A Demand Perspective," Land, MDPI, vol. 11(8), pages 1-14, July.
    8. Doll, Claire A. & Burton, Michael P. & Pannell, David J. & Rollins, Curtis L., 2022. "How green is green enough? Landscape preferences and water use in urban parks," Working Papers 320820, University of Western Australia, School of Agricultural and Resource Economics.
    9. Doll, Claire A. & Burton, Michael P. & Pannell, David J. & Rollins, Curtis L., 2023. "Are greenspaces too green? Landscape preferences and water use in urban parks," Ecological Economics, Elsevier, vol. 211(C).
    10. Peng, Yanling & Ren, Yanjun & Zhong, Yu & Jiang, Yuansheng, 2022. "Farmers’ Heterogeneous Preferences for Selecting Attributes of Farmland Management Right Mortgages: Evidence from Western China," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322408, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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