The Impact of Water Quality on Southern California Beach Recreation: A Finite Mixture Model Approach
This paper uses a finite mixture logit (FML) model to investigate the heterogeneity of preferences of beach users for water quality at beaches in Southern California. The results are compared with conventional approaches based conditional logit (CL) and random parameters logit (RPL). The FML approach captures variation in preferences by modeling individual recreator choices using a mixture of several distinct preference groups, where group membership is a function of individual characteristic and seasonal variables. The FML parameter estimates are used to calculate welfare measures for improvements in beach quality through a reduction of water pollution. The FML segment specific welfare measures bound the traditional CL and RPL mean welfare estimates, and have the advantage of highlighting the distribution of the population sampleâ€™s preferences. Analysis of beach recreation site choice data indicates the existence of four representative preference groups within the survey respondent sample. As a result, willingness to pay measures for improvements in water quality and other beach site attribute changes can be weighted across individuals to calculate the distribution of individual welfare measures. One group of recreators is characterized as people who go to the beach and engage in water recreation with children. An interesting finding is that this group has a lower meanWTP for improving water quality than groups who go without children. This may well be an example of cognitive dissonance: parents find they go to the beach more often than others who donâ€™t have children, since that keeps the children occupied and happy, and they adapt their perception of the water quality to be consistent with their behavior. Previous environmental and resource economic applications of the FML have been limited to applications with small choice sets (6) and group membership variables (4). This paper extends the FML model through the estimation of a large (51) choice set with 9 membership variables. This application is the first to incorporate seasonal variables into the group membership function to capture seasonal heterogeneity. Estimated welfare changes are calculated using the compensating variation measure for several hypothetical beach closure and water quality degradation scenarios. Estimation results indicate that the FML welfare estimates differ from those calculated using the traditional logit or RPL models. The FML model sheds light onto which subsets of beach recreators are likely to be impacted by different scenarios of resource change.
|Date of creation:||01 Mar 2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (510) 642-3345
Fax: (510) 643-8911
Web page: http://www.escholarship.org/repec/are_ucb/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peter Arcidiacono & John Bailey Jones, 2003.
"Finite Mixture Distributions, Sequential Likelihood and the EM Algorithm,"
Econometric Society, vol. 71(3), pages 933-946, 05.
- Arcidiacono, Peter & Jones, John B., 2000. "Finite Mixture Distribution, Sequential Likelihood, and the EM Algorithm," Working Papers 00-16, Duke University, Department of Economics.
- Bill Provencher & Kenneth A. Baerenklau & Richard C. Bishop, 2002. "A Finite Mixture Logit Model of Recreational Angling with Serially Correlated Random Utility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 1066-1075.
- Adamowicz, Wiktor & Swait, Joffre & Boxall, Peter & Louviere, Jordan & Williams, Michael, 1997. "Perceptions versus Objective Measures of Environmental Quality in Combined Revealed and Stated Preference Models of Environmental Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 65-84, January.
- 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.
- Harvey S. Rosen & Kenneth A. Small, 1979.
"Applied Welfare Economics with Discrete Choice Models,"
NBER Working Papers
0319, National Bureau of Economic Research, Inc.
- Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, vol. 49(1), pages 105-30, January.
- Mohn, Craig & Hanemann, W. Michael & Pendleton, Linwood & Layton, David, 2003. "Shifting Sands: A Preliminary Exploration of Seasonal Variation in Preferences for Beaches," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0qd37084, Department of Agricultural & Resource Economics, UC Berkeley.
- Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
- Kamel Jedidi & Harsharanjeet S. Jagpal & Wayne S. DeSarbo, 1997. "Finite-Mixture Structural Equation Models for Response-Based Segmentation and Unobserved Heterogeneity," Marketing Science, INFORMS, vol. 16(1), pages 39-59.
- Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
- Peter Boxall & Wiktor Adamowicz, 2002. "Understanding Heterogeneous Preferences in Random Utility Models: A Latent Class Approach," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(4), pages 421-446, December.
- Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, December.
- Hausman, Jerry & McFadden, Daniel, 1984.
"Specification Tests for the Multinomial Logit Model,"
Econometric Society, vol. 52(5), pages 1219-40, September.
- D. McFadden & J. Hausman, 1981. "Specification Tests for the Multinominal Logit Model," Working papers 292, Massachusetts Institute of Technology (MIT), Department of Economics.
- J. Morgan Jones & Jane T. Landwehr, 1988. "Removing Heterogeneity Bias from Logit Model Estimation," Marketing Science, INFORMS, vol. 7(1), pages 41-59.
- Wedel, M, et al, 1993. "A Latent Class Poisson Regression Model for Heterogeneous Count Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(4), pages 397-411, Oct.-Dec..
- Ruud, Paul A., 1991.
"Extensions of estimation methods using the EM algorithm,"
Journal of Econometrics,
Elsevier, vol. 49(3), pages 305-341, September.
- Paul A. Ruud., 1988. "Extensions of Estimation Methods Using the EM Algorithm.," Economics Working Papers 8899, University of California at Berkeley.
- George R. Parsons, 1991. "A Note on Choice of Residential Location in Travel Cost Demand Models," Land Economics, University of Wisconsin Press, vol. 67(3), pages 360-364.
- Daniel McFadden, 1986. "The Choice Theory Approach to Market Research," Marketing Science, INFORMS, vol. 5(4), pages 275-297.
- Mohn, Craig & Hanemann, W. Michael & Pendleton, Linwood & Layton, David, 2003. "Shifting sands: a preliminary exploration of seasonal variation in preferences for beaches," CUDARE Working Paper Series 966, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
- Beard, T Randolph & Caudill, Steven B & Gropper, Daniel M, 1991. "Finite Mixture Estimation of Multiproduct Cost Functions," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 654-64, November.
When requesting a correction, please mention this item's handle: RePEc:cdl:agrebk:qt9v17r715. 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: (Lisa Schiff)
If references are entirely missing, you can add them using this form.