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Models for Non-Exclusive Multinomial Choice, with Application to Indonesian Rural Households

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  • Christopher L. Gilbert

    ()

  • Francesca Modena

    ()

Abstract

Textbook discussions of discrete choice modelling focus on binomial and multinomial choice models in which agents select a single response. We consider the situation of non-exclusive multinomial choice. The widely used Marginal Logit Model imposes independence and has other disadvantages. We propose two models which account for non-exclusive and dependent multiple responses and require at least one response. In the first and simpler specification, the Poisson-multinomial, households first choose the number of responses to a specific shock, and then the specific choices are identified to maximize household utility conditional on the former choice. The second specification, the threshold-multinomial, generalizes the standard multinomial logit model by supposing that agents will choose more than one response if the utility they derive from other choices is �close� to that of the utility-maximizing choice. We apply these two approaches to reported responses of rural Indonesian rural households to demographic and economic shocks.

Suggested Citation

  • Christopher L. Gilbert & Francesca Modena, 2007. "Models for Non-Exclusive Multinomial Choice, with Application to Indonesian Rural Households," Department of Economics Working Papers 0724, Department of Economics, University of Trento, Italia.
  • Handle: RePEc:trn:utwpde:0724
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    Cited by:

    1. Francesca Modena & Christopher L. Gilbert, 2012. "Household Responses to Economic and Demographic Shocks: Marginal Logit Analysis using Indonesian Data," Journal of Development Studies, Taylor & Francis Journals, vol. 48(9), pages 1306-1322, September.

    More about this item

    Keywords

    Discrete choice models; Marginal logit; Shocks; Risk coping strategies;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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