IDEAS home Printed from https://ideas.repec.org/p/wai/econwp/07-18.html
   My bibliography  Save this paper

Incorporating Discontinuous Preferences into the Analysis of Discrete Choice Experiments

Author

Abstract

: Data from a discrete choice experiment on improvements of rural landscape attributes are used to investigate the implications of discontinuous preferences on willingness to pay estimates. Using a multinomial error component logit model, we explore differences in scale and unexplained variance between respondents with discontinuous and continuous preferences and condition taste intensities on whether or not each attribute was considered by the respondent during the evaluation of alternatives. Results suggest that significant improvements in model performance can be achieved when discontinuous preferences are accommodated in the econometric specification, and that the magnitude and robustness of the willingness to pay estimates are sensitive to discontinuous preferences.

Suggested Citation

  • Danny Campbell & W. George Hutchinson & Riccardo Scarpa, 2007. "Incorporating Discontinuous Preferences into the Analysis of Discrete Choice Experiments," Working Papers in Economics 07/18, University of Waikato.
    • Handle: RePEc:wai:econwp:07/18
    as

    Download full text from publisher

    File URL: https://repec.its.waikato.ac.nz/wai/econwp/0718.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
    2. Caussade, Sebastián & Ortúzar, Juan de Dios & Rizzi, Luis I. & Hensher, David A., 2005. "Assessing the influence of design dimensions on stated choice experiment estimates," Transportation Research Part B: Methodological, Elsevier, vol. 39(7), pages 621-640, August.
    3. Saelensminde, Kjartan, 2006. "Causes and consequences of lexicographic choices in stated choice studies," Ecological Economics, Elsevier, vol. 59(3), pages 331-340, September.
    4. William S. Breffle & Robert D. Rowe, 2002. "Comparing Choice Question Formats for Evaluating Natural Resource Tradeoffs," Land Economics, University of Wisconsin Press, vol. 78(2), pages 298-314.
    5. Spash, Clive L. & Hanley, Nick, 1995. "Preferences, information and biodiversity preservation," Ecological Economics, Elsevier, vol. 12(3), pages 191-208, March.
    6. Bhat, Chandra R., 2001. "Quasi-random maximum simulated likelihood estimation of the mixed multinomial logit model," Transportation Research Part B: Methodological, Elsevier, vol. 35(7), pages 677-693, August.
    7. Rosenberger, Randall S. & Peterson, George L. & Clarke, Andrea & Brown, Thomas C., 2003. "Measuring dispositions for lexicographic preferences of environmental goods: integrating economics, psychology and ethics," Ecological Economics, Elsevier, vol. 44(1), pages 63-76, February.
    8. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555.
    9. Samuelson, William & Zeckhauser, Richard, 1988. "Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
    10. Campbell, Danny & Hutchinson, W. George & Scarpa, Riccardo, 2006. "Using Discrete Choice Experiments to Derive Individual-Specific WTP Estimates for Landscape Improvements under Agri-Environmental Schemes: Evidence from the Rural Environment Protection Scheme in Irel," Sustainability Indicators and Environmental Valuation Working Papers 12220, Fondazione Eni Enrico Mattei (FEEM).
    11. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    12. Spash, Clive L., 2000. "Ecosystems, contingent valuation and ethics: the case of wetland re-creation," Ecological Economics, Elsevier, vol. 34(2), pages 195-215, August.
    13. F Alpizar & F Carlsson & P Martinsson, 2003. "Using Choice Experiments for Non-Market Valuation," Economic Issues Journal Articles, Economic Issues, vol. 8(1), pages 83-110, March.
    14. Mika Rekola, 2003. "Lexicographic Preferences in Contingent Valuation: A Theoretical Framework with Illustrations," Land Economics, University of Wisconsin Press, vol. 79(2), pages 277-291.
    15. R.K. Blamey & J.W. Bennett & J.J. Louviere & M.D. Morrison & J.C. Rolfe, 2002. "Attribute Causality in Environmental Choice Modelling," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(2), pages 167-186, October.
    16. Hensher, David A. & Rose, John & Bertoia, Tony, 2007. "The implications on willingness to pay of a stochastic treatment of attribute processing in stated choice studies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 43(2), pages 73-89, March.
    17. Robert Sugden, 2005. "Anomalies and Stated Preference Techniques: A Framework for a Discussion of Coping Strategies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(1), pages 1-12, September.
    18. Luce, Mary Frances & Payne, John W. & Bettman, James R., 2000. "Coping with Unfavorable Attribute Values in Choice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 81(2), pages 274-299, March.
    19. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D. With contributions by-Name:Adamowicz,Wiktor, 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304, December.
    20. Gowdy, John M. & Mayumi, Kozo, 2001. "Reformulating the foundations of consumer choice theory and environmental valuation," Ecological Economics, Elsevier, vol. 39(2), pages 223-237, November.
    21. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
    22. Ekin Birol & Phoebe Koundouri (ed.), 2008. "Choice Experiments Informing Environmental Policy," Books, Edward Elgar Publishing, number 4102.
    23. Michael Lockwood, 1999. "Preference Structures, Property Rights, and Paired Comparisons," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(1), pages 107-122, January.
    24. Lockwood, Michael, 1996. "Non-Compensatory Preference Structures In Non-Market Valuation Of Natural Area Policy," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(2), pages 1-17, August.
    25. Riccardo Scarpa & Kenneth G. Willis & Melinda Acutt, 2007. "Valuing externalities from water supply: Status quo, choice complexity and individual random effects in panel kernel logit analysis of choice experiments," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 50(4), pages 449-466.
    26. David Hensher & John Rose & William Greene, 2005. "The implications on willingness to pay of respondents ignoring specific attributes," Transportation, Springer, vol. 32(3), pages 203-222, May.
    27. Kjartan Sælensminde, 2002. "The Impact of Choice Inconsistencies in Stated Choice Studies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(4), pages 403-420, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Campbell, Danny & Hutchinson, W. George & Scarpa, Riccardo, 2006. "Lexicographic Preferences in Discrete Choice Experiments: Consequences on Individual-Specific Willingness to Pay Estimates," Sustainability Indicators and Environmental Valuation Working Papers 12224, Fondazione Eni Enrico Mattei (FEEM).
    2. Kosenius, Anna-Kaisa, 2013. "Preference discontinuity in choice experiment: Determinants and implications," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 138-145.
    3. Mohammed Alemu & Morten Mørkbak & Søren Olsen & Carsten Jensen, 2013. "Attending to the Reasons for Attribute Non-attendance in Choice Experiments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(3), pages 333-359, March.
    4. Saelensminde, Kjartan, 2006. "Causes and consequences of lexicographic choices in stated choice studies," Ecological Economics, Elsevier, vol. 59(3), pages 331-340, September.
    5. Mørkbak, Morten Raun & Olsen, Søren Bøye & Campbell, Danny, 2014. "Behavioral implications of providing real incentives in stated choice experiments," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 102-116.
    6. Kaye-Blake, William & Abell, Walter L. & Zellman, Eva, 2009. "Respondents’ ignoring of attribute information in a choice modelling survey," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), pages 1-18.
    7. Haghani, Milad & Bliemer, Michiel C.J. & Hensher, David A., 2021. "The landscape of econometric discrete choice modelling research," Journal of choice modelling, Elsevier, vol. 40(C).
    8. Marit Kragt & Jeffrey Bennett, 2012. "Attribute Framing in Choice Experiments: How Do Attribute Level Descriptions Affect Value Estimates?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(1), pages 43-59, January.
    9. Ladenburg, Jacob & Olsen, Søren Bøye, 2014. "Augmenting short Cheap Talk scripts with a repeated Opt-Out Reminder in Choice Experiment surveys," Resource and Energy Economics, Elsevier, vol. 37(C), pages 39-63.
    10. Silvia Ferrini & Riccardo Scarpa, 2005. "Experimental Designs for Environmental Valuation with Choice-Experiments: A Monte-Carlo Investigation," Working Papers in Economics 05/08, University of Waikato.
    11. J Blasch & B van der Kroon & P van Beukering & R Munster & S Fabiani & P Nino & S Vanino, 2022. "Farmer preferences for adopting precision farming technologies: a case study from Italy," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 49(1), pages 33-81.
    12. Wan Norhidayah W Mohamad & Ken Willis & Neil Powe, 2019. "The Status Quo In Discrete Choice Experiments: Is It Relevant?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(02), pages 507-532, March.
    13. Fredrik Carlsson & Mitesh Kataria & Elina Lampi, 2010. "Dealing with Ignored Attributes in Choice Experiments on Valuation of Sweden’s Environmental Quality Objectives," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(1), pages 65-89, September.
    14. Halkos, George & Galani, Georgia, 2016. "Assessing willingness to pay for marine and coastal ecosystems: A Case Study in Greece," MPRA Paper 68767, University Library of Munich, Germany.
    15. Christoph, Inken B. & Peter, Guenter & Rothe, Andrea & Salamon, Petra & Weber, Sascha A. & Weible, Daniela, 2011. "School Milk Consumption in Germany - What are Important Product Attributes for Children and Parents?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114294, European Association of Agricultural Economists.
    16. Helen Scarborough & Jeff Bennett, 2012. "Cost–Benefit Analysis and Distributional Preferences," Books, Edward Elgar Publishing, number 14376.
    17. Campbell, Danny, 2007. "Combining mixed logit models and random effects models to identify the determinants of willingness to pay for rural landscape improvements," 81st Annual Conference, April 2-4, 2007, Reading University, UK 7975, Agricultural Economics Society.
    18. Kragt, Marit Ellen & Bennett, Jeffrey W., 2011. "Using choice experiments to value catchment and estuary health in Tasmania with individual preference heterogeneity," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(2), pages 1-21.
    19. Ferrini, Silvia & Scarpa, Riccardo, 2007. "Designs with a priori information for nonmarket valuation with choice experiments: A Monte Carlo study," Journal of Environmental Economics and Management, Elsevier, vol. 53(3), pages 342-363, May.
    20. Espinosa-Goded, Maria & Barreiro-Hurlé, Jesús & Ruto, Eric, 2009. "Modeling Farmers Prefences For Agrienvironmental Scheme Design: A Spanish Case Study," 2009 Conference, August 16-22, 2009, Beijing, China 50328, International Association of Agricultural Economists.

    More about this item

    Keywords

    discontinuous preferences; heteroskedastic mixed logit; discrete choice experiments; multinomial error component logit model; rural landscape; willingness to pay;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:wai:econwp:07/18. 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: . General contact details of provider: https://edirc.repec.org/data/dewaknz.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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Geua Boe-Gibson (email available below). General contact details of provider: https://edirc.repec.org/data/dewaknz.html .

    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.