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Rounding in Recreation Demand Models: A Latent Class Count Model

  • Evans, Keith
  • Herriges, Joseph A.

A commonly observed feature of visitation data, elicited via a survey instrument, is a greater propensity for individuals to report trip numbers that are multiples of 5's, relative to other possible integers (such as 3 or 6). One explanation of this phenomenon is that some survey respondents have difficulty recalling the exact number of trips taken and instead choose to round their responses. This paper examines the impact that rounding can have on the estimated demand for recreation and the bias that it may induce on subsequent welfare estimates. We propose the use of a latent class structure in which respondents are assumed to be members of either a nonrounding or a rounding class. A series of generated data experiments are provided to illustrate the range of possible impacts that ignoring rounding can have on the estimated parameters of the model and on the welfare implications from site closure. The results suggest that biases can be substantial, particularly when then unconditional mean number of trips is in the range from two to four. An illustrative application is provided using visitation data to Saylorville Lake in central Iowa.

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File URL: http://www.econ.iastate.edu/sites/default/files/publications/papers/p11594-2010-06-02.pdf
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 31594.

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Date of creation: 02 Jun 2010
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Handle: RePEc:isu:genres:31594
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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  1. 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.
  2. Jeff Dominitz & Charles F. Manski, 1996. "Perceptions of Economic Insecurity: Evidence from the Survey of Economic Expectations," NBER Working Papers 5690, National Bureau of Economic Research, Inc.
  3. Edward Morey & Jennifer Thacher & William Breffle, 2006. "Using Angler Characteristics and Attitudinal Data to Identify Environmental Preference Classes: A Latent-Class Model," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(1), pages 91-115, 05.
  4. Manski, Charles F. & Molinari, Francesca, 2010. "Rounding Probabilistic Expectations in Surveys," Journal of Business & Economic Statistics, American Statistical Association, vol. 28(2), pages 219-231.
  5. 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.
  6. Greene, William H. & Hensher, David A., 2003. "A latent class model for discrete choice analysis: contrasts with mixed logit," Transportation Research Part B: Methodological, Elsevier, vol. 37(8), pages 681-698, September.
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