IDEAS home Printed from https://ideas.repec.org/p/isu/genres/12331.html
   My bibliography  Save this paper

Model Performance of Nested Logit Models when Welfare Estimation is the Goal, The

Author

Listed:
  • Kling, Catherine L.
  • Herriges, Joseph A.

Abstract

In this paper we examine the performance of nested logit models in the face of two specification errors. The first specification error arises when a nested logit model is appropriate, but the wrong nesting structure is chosen. The second specification error occurs when the underlying stochastic process is not consistent with nested logit. Particular attention is placed upon the impact that these errors can have on welfare predictions. Monte Carlo experiments are used, together with analytical results, to examine the resulting bias to welfare estimates. In addition, we explore the value of alternative model selection criteria in choosing nesting structures. Key words: nested logit, welfare analysis.

Suggested Citation

  • Kling, Catherine L. & Herriges, Joseph A., 1997. "Model Performance of Nested Logit Models when Welfare Estimation is the Goal, The," Staff General Research Papers Archive 12331, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:12331
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    as
    1. Caves, Douglas W. & Christensen, Laurits R. & Herriges, Joseph A., 1984. "Consistency of residential customer response in time-of-use electricity pricing experiments," Journal of Econometrics, Elsevier, pages 179-203.
    2. Caves, Douglas W. & Christensen, L. R. & Herriges, Joseph A., 1984. "The Consistency of the Residential Customer Response in Time-Of-Use Electricity Pricing Experiments," Staff General Research Papers Archive 10798, Iowa State University, Department of Economics.
    3. Tishler, Asher, 1983. "The industrial and commercial demand for electricity under time-of-use pricing," Journal of Econometrics, Elsevier, pages 369-384.
    4. Douglas W. Caves & Joseph A. Herriges & Kathleen A. Kuester, 1989. "Load Shifting Under Voluntary Residential Time-of-Use Rates," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 83-99.
    5. Hausman, Jerry A. & Trimble, John, 1984. "Appliance purchase and usage adaptation to a permanent time-of-day electricity rate schedule," Journal of Econometrics, Elsevier, pages 115-139.
    6. Park, Rolla Edward & Acton, Jan Paul, 1984. "Large business customer response to time-of-day electricity rates," Journal of Econometrics, Elsevier, pages 229-252.
    7. Train, Kenneth E & McFadden, Daniel L & Goett, Andrew A, 1987. "Consumer Attitudes and Voluntary Rate Schedules for Public Utilities," The Review of Economics and Statistics, MIT Press, pages 383-391.
    8. Douglas W. Caves and Laurits R. Christensen, 1980. "Residential Substitution of Off-peak for Peak Electricity Usage under Time-of-Use Pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    9. Aigner, Dennis J. & Leamer, Edward E., 1984. "Estimation of time-of-use pricing response in the absence of experimental data : An application of the methodology of data transferability," Journal of Econometrics, Elsevier, pages 205-227.
    10. Dennis J. Aigner & Joseph G. Hirschberg, 1985. "Commercial/Industrial Customer Response to Time-Of-Use Electricity Prices: Some Experimental Results," RAND Journal of Economics, The RAND Corporation, pages 341-355.
    11. Aigner, Dennis J & Ghali, Khalifa, 1989. "Self-Selection in the Residential Electricity Time-of-Use Pricing Experiments," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages 131-144, Supplemen.
    12. Kohler, Daniel F. & Mitchell, Bridger M., 1984. "Response to residential time-of-use electricity rates : How transferable are the findings?," Journal of Econometrics, Elsevier, pages 141-177.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Torres, Cati & Hanley, Nick & Riera, Antoni, 2011. "How wrong can you be? Implications of incorrect utility function specification for welfare measurement in choice experiments," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 111-121, July.
    2. Yongjie Ji & Joseph A. Herriges & Catherine L. Kling, 2016. "Modeling Recreation Demand When the Access Point Is Unknown," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(3), pages 860-880.
    3. Cati Torres & Sergio Colombo & Nick Hanley, 2014. "Incorrectly accounting for preference heterogeneity in choice experiments: what are the implications for welfare measurement?," Discussion Papers in Environment and Development Economics 2014-07, University of St. Andrews, School of Geography and Sustainable Development.
    4. Blamey, R. K. & Bennett, J. W. & Louviere, J. J. & Morrison, M. D. & Rolfe, J., 2000. "A test of policy labels in environmental choice modelling studies," Ecological Economics, Elsevier, vol. 32(2), pages 269-286, February.
    5. repec:sss:wpaper:201407 is not listed on IDEAS
    6. Thiene, Mara & Swait, Joffre & Scarpa, Riccardo, 2017. "Choice set formation for outdoor destinations: The role of motivations and preference discrimination in site selection for the management of public expenditures on protected areas," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 152-173.
    7. Crooker, John & Kling, Catherine L., 2000. "Nonparametric Bounds on Welfare Measures: A New Tool for Nonmarket Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 39(2), pages 145-161, March.
    8. Cati Torres & Sergio Colombo & Nick Hanley, 2014. "Incorrectly accounting for preference heterogeneity in choice experiments: what are the implications for welfare measurement?," Discussion Papers in Environment and Development Economics 2014-07, University of St. Andrews, School of Geography and Sustainable Development.
    9. Johan Eyckmans & Michael Finus, 2004. "An Almost Ideal Sharing Scheme for Coalition Games with Externalities," Energy, Transport and Environment Working Papers Series ete0414, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    10. Colombo, Sergio & Hanley, Nicholas & Torres, Cati, 2011. "Incorrectly accounting for taste heterogeneity in choice experiments: Does it really matter for welfare measurement?," Stirling Economics Discussion Papers 2011-02, University of Stirling, Division of Economics.
    11. Catalina M. Torres Figuerola & Nick Hanley & Antoni Riera Font, 2008. "The implications of incorrect utility function specification for welfare measurement in choice experiments," CRE Working Papers (Documents de treball del CRE) 2008/6, Centre de Recerca Econòmica (UIB ·"Sa Nostra").
    12. Colombo, Sergio & Hanley, Nicholas & Torres, Cati, 2011. "Incorrectly accounting for taste heterogeneity in choice experiments: Does it really matter for welfare measurement?," Stirling Economics Discussion Papers 2011-02, University of Stirling, Division of Economics.

    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:isu:genres:12331. 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: (Curtis Balmer). General contact details of provider: http://edirc.repec.org/data/deiasus.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.