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Combining discrete and continuous mixing approaches to accommodate heterogeneity in price sensitivities in environmental choice analysis


  • Campbell, Danny
  • Doherty, Edel
  • Hynes, Stephen
  • van Rensburg, Tom M.


Data from a discrete choice experiment aimed at eliciting the demand for recreational walking trails on farmland in the Republic of Ireland is used to explore the consequences of misspecifying the cost coefficient. To enable straightforward calculation of WTP from the distributions of the non-price coefficients, the price coefficient is typically held constant in mixed logit models. This implies that all respondents are equally price sensitive. In this paper we test the validity of this assumption. Our approach is based on a comparison and combination of discrete and continuous mixing approaches (i.e., a mixture of distributions) to uncover the unobserved heterogeneity in price sensitivities. Results from the analysis highlight that model fit and willingness to pay are sensitive to the distributional assumptions used to represent the price coefficient.

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  • Campbell, Danny & Doherty, Edel & Hynes, Stephen & van Rensburg, Tom M., 2010. "Combining discrete and continuous mixing approaches to accommodate heterogeneity in price sensitivities in environmental choice analysis," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91723, Agricultural Economics Society.
  • Handle: RePEc:ags:aesc10:91723

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    References listed on IDEAS

    1. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
    2. van Calker, K.J. & Berentsen, P.B.M. & Giesen, G.W.J. & Huirne, R.B.M., 2008. "Maximising sustainability of Dutch dairy farming systems for different stakeholders: A modelling approach," Ecological Economics, Elsevier, vol. 65(2), pages 407-419, April.
    3. Van Passel, Steven & Nevens, Frank & Mathijs, Erik & Van Huylenbroeck, Guido, 2007. "Measuring farm sustainability and explaining differences in sustainable efficiency," Ecological Economics, Elsevier, vol. 62(1), pages 149-161, April.
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    Cited by:

    1. Bruno Lanz & Allan Provins, 2013. "Valuing Local Environmental Amenity with Discrete Choice Experiments: Spatial Scope Sensitivity and Heterogeneous Marginal Utility of Income," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(1), pages 105-130, September.
    2. Erlend Dancke Sandorf & Danny Campbell & Nick Hanley, 2015. "Disentangling the Influence of Knowledge on Processing Strategies in Choice Modelling," Discussion Papers in Environment and Development Economics 2015-02, University of St. Andrews, School of Geography and Sustainable Development.

    More about this item


    discrete choice experiments; discrete mixtures; continuous mixtures; mixtures of distributions; price sensitivities; farmland recreation; willing to pay space; Environmental Economics and Policy;

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