willingness to pay for quality improvements comparative statics and interpretation of contingent valuation results this paper extends variation function theory by examining the effects of changes in prices quality and income on willingness to pay for quality change comparative static effects are found for both on site users and nonusers of the resource these results are used to interpret contingent valuation empirical models for example the substitution and complementary relationships between trips to natural resource sites can be identified this paper also suggests tests for comparison of contingent valuation with recreation demand models and other tests of validity

measuring the financial sophistication of households many households invest in ways that are hard to reconcile with standard financial theory and that have been labelled as investment mistakes campbell 2006 calvet campbell and sodini henceforth ccs 2007 there is increasing interest among household finance research ers in the concept of financial sophistication defined as the ability of a household to avoid making such mistakes a growing empirical lit erature documents a cross sectional correlation between household characteristics and invest ment mistakes richer better educated house holds tend to be better diversified marshall blume and irwin friend 1975 ccs 2007 william goetzmann and alok kumar 2008 annette vissing jorgensen 2003 display less inertia julie agnew pierluigi balduzzi and annika sunden 2003 yannis bilias dimitris georgarakos and michael haliassos 2008 campbell 2006 ccs 2009 vissing jorgensen 2002 and have a weaker disposition to hold losing and sell winning stocks ccs 2009 ravi dhar and ning zhu 2006 than other house holds one feature of these earlier papers is that mistakes are investigated one at a time often

do media consumers really dislike advertising an empirical assessment of the role of advertising in print media markets this paper uses data on german consumer magazines observed between 1992 and 2004 to analyze the extent to which consumers dis like advertising we estimate logit demand models separately for the six most important magazine segments in terms of circulation we find little evidence for readers disliking advertising on the contrary we show that readers in many magazine segments appreciate advertising readers of women s magazines business and politics magazines as well as car magazines market segments where advertisements are relatively more informative appreciate advertising while advertising is nuisance to readers of adult magazines a segment where advertisements are particularly uninformative demand for interior design magazines is not well identified our logit demand estimates are confirmed by logit demand models with random coefficients and by magazine specific monopoly demand models

possibilities for including the opportunity cost of time in recreation demand systems recreation demand modelers have attempted to identify and incorporate the opportunity cost of an individual s time in travel and on site in the model larson 1993b focused on the value of leisure time in a model where individuals face a fixed work week in this paper we examine the connection between labor supply and recreation demands and focus on conditional demand systems we illustrate that corner solution models are not needed to explain several interesting time related recreation issues

a lifecycle perspective of stock market performance and wellbeing we estimate the effect of stock market fluctuations on subjective wellbeing and mental health using australian survey data over the period 2001 2012 which includes the global financial crisis a particular innovation of the paper is the use of three satisfaction measures overall financial employment and the use of a stylised lifecycle investment model these features coupled with a robust identification strategy based on comparing survey respondents interviewed in the same quarter and location allow us to better understand individual reactions to stock market changes we find that stock market increases lead to a significant but modest improvements in life satisfaction and mental health this effect is driven by young and middle aged males and is stronger for those with direct exposure to the stock market for young cohorts the stock market index acts as a leading indicator of employment prospects whilst for older cohorts it acts directly on financial satisfaction

site aggregation in a random utility model of recreation random utility models are commonly used to model the choice among a set of alternatives often due to data or computational constraints the analyst must use aggregated alternatives to estimate the model these aggregates are defined by averaging characteristics of alternatives over prespecified groups in this analysis we demonstrate that unless some very restrictive conditions hold the use of aggregated alternatives will lead to biased results then using a data set of recreational fishing in wisconsin we show the effects that this bias can have on the results estimated from the model

spatial boundaries and choice set definition in a random utility model of recreation demand we are concerned with the definition of choice set used in random utility models of recreation demand in particular we are concerned with the spatial boundaries used to define choice sets in this paper using a model of day trip fishing in maine we examine the sensitivity of parameter and welfare estimates to changes in the spatial boundary we find that there exists some threshold distance beyond which adding more sites to the choice set has negligible effects on the estimation results

multiple product firms a nested logit approach this paper proves the existence of a symmetric equilibrium with multiproduct firms using a nested logit model of demand the demand model is parameterized by two variables that characterize different dimensions of preference for variety these reflect intragroup heterogeneity and intergroup heterogeneity a group or nest being the set of products produced by a firm there are then two dimensions to market performance the total number of firms and the range of products produced per firm it is shown that the market equilibrium involves an excessive number of firms but each firm provides too few products copyright 1992 by blackwell publishing ltd

evaluation of the subjective probabilities of survival in the health and retirement study in the health and retirement study respondents were asked about the chances they would live to 75 or to 85 we analyze these responses to determine if they behave like probabilities of survival if their averages are close to average probabilities in the population and if they have correlations with other variables that are similar to correlations with actual mortality outcomes we find that generally they do behave like probabilities and that they do aggregate to population probabilities most remarkable however is that they covary with other variables in the same way actual outcomes vary with the variables for example respondents with higher socioeconomic status give higher probabilities of survival whereas respondents who smoke give lower probabilities we conclude that these measures of subjective probabilities have great potential use in models of intertemporal decision making under uncertainty

stock market expectations of dutch households despite its importance for the analysis of life cycle behavior and in particular retirement planning stock ownership by private households is poorly understood among other approaches to investigate this puzzle recent research has started to elicit private households expectations of stock market returns this paper reports findings from a study that collected data over a two year period both on households stock market expectations subjective probabilities of gains or losses and on whether they own stocks we document substantial heterogeneity in financial market expectations expectations are correlated with stock ownership over the two years of our data stock market prices increased and expectations of future stock market price changes also increased lending support to the view that expectations are influenced by recent stock gains or losses

the individual travel cost method with consumer specific values of travel time savings the treatment of the opportunity cost of travel time in travel cost models has been an area of research interest for many decades our analysis develops a methodology to combine the travel distance and travel time data with respondent specific estimates of the value of travel time savings vtts the individual vtts are elicited with the use of discrete choice stated preference methods the travel time valuation procedure is integrated into the travel cost valuation exercise to create a two equation structural model of site valuation since the travel time equation of the structural model incorporates individual preference heterogeneity the full structure model provides a travel cost site demand model based upon individualized values of time the methodology is illustrated in a study of recreational birdwatching more specifically visits to a stork village in poland we show that the usual practice of basing respondents vtts on 1 3 of their wage rate is largely unfounded and propose alternatives including a separate component of the travel cost survey aimed at valuation of respondents vtts or as a second best asking if they wish if their journey was shorter and for those who do use full hourly wage as an indicator of their vtts

reconciling models of recreational route and site choices when employing travel cost models the unit cost of the essential input travel in the household s production of a recreation experience is central to obtaining the preference structure for the recreational good however little attention has been given to the choice of the route although the route defines the monetary and time costs used to compute travel costs conventional wisdom considers time and money costs in determining the cost per mile in the estimation of site choices but does not use both in determining the route choices and mileages this paper investigates whether models of recreational site and route choices can be reconciled

annual fees and recreation choice models of recreation behavior have typically ignored the role of fixed annual fees such as the fee for a recreational license in determining choice and welfare we demonstrate how techniques from the literature on discrete continuous choice and two part tariffs can address a situation where fixed annual fees are essential to determining the choice of a recreation site we explore how accounting for value captured by fixed fees can influence the way resource changes are assessed

a dynamic oligopoly structural model for the prescription drug market after patent expiration this article incorporates consumer learning and heterogeneity into a dynamic oligopoly model for the prescription drug market in the model both firms and patients need to learn the generic qualities via patients experiences generic firms entry decisions are endogenous but their entry timings depend on a random approval process i apply the model to examine the impact of shortening the expected generic approval time although this policy experiment brings generics to the market sooner it increases a potential entrant s likelihood of entering a crowded market and hence could reduce the total number of generic entrants and consumer welfare

voluntary export restraints on automobiles evaluating a trade policy the authors evaluate the voluntary export restraint that was initially placed on exports of automobiles from japan in 1981 they evaluate the impact this policy had on u s consumer welfare firm profits and foregone tariff revenue from its initiation through 1990

the contingent valuation and the travel cost methods applied to mucubaji lake area natural resources and environmental services act as characterized public goods because they are sources of direct utility without any associated market with related prices for instance the recreational services of the natural parks are guaranteed to the visitors by an entrance payment ticket the contingent valuation method and the travel cost method are used to define the variables referred to the visitors every season time and willingness to pay wtp in the mucubaji lake area the wtp average rose from bs 5 612 68 to bs 8 625 00 when the services were improved to the visitors it was found that travel costs have a negative impact on the expected demand for trips to the mucubaji lake area travel costs to an alternate site impact positively on that demand besides female people and independent occupation have a big expected demand for every trip to the natural park

combining revealed and stated preferences consistency tests and their interpretations this article models the recreation demand for iowa wetlands combining survey data on both actual usage patterns i e revealed preferences rps and anticipated changes to those patterns under hypothetical increases in trip costs i e stated preferences sps we formulate and test specific hypotheses concerning potential sources of bias in each approach and discuss what can be learned about the validity of the models from such tests

reference pricing and firms pricing strategies abstract within a horizontal differentiation model and allowing for heterogeneous qualities we analyze the effects of reference pricing reimbursement on firms pricing strategies with this analysis we find inherent incentives for firms pricing behavior and consequently we shed some light on the time consistency of such policy the analysis encompasses different reference price rules i reference price as the minimum of the observed prices in the market ii reference price as a linear combination of firms prices results show that under the minimum policy firms are not able to coordinate on higher prices while the linear policy implicitly provides a coordination device we have also found that relatively to the linear policy when the reference price is the minimum of observed prices after policy implementation total and private expenditures are higher and consumer surplus and firms profits are lower with quality differentiation both the minimum and linear policies unambiguously lead to higher prices

competition in off patent drug markets issues regulation and evidence in recent years health insurers have placed a great deal of emphasis on the ability of generic medicines to deliver significant savings to overstretched health care budgets due to their lower cost and potential for a more efficient resource allocation in this paper we study market developments after patent expiry whether health insurance captures the financial benefits from cheaper generics and whether regulation and product differentiation among others have any power in explaining originator and generic price movements generic entry and diffusion we find that health insurance does not capitalize fully or fast enough on the cost advantage of generic medicines either because generic policies do not encourage their fast uptake or because generic drug prices are high and frequently tied directly or indirectly to originator drug prices we also find that reference pricing a particular form of reimbursement regulation encourages generic entry and reduces generic prices but only marginally finally in generic markets characterized by homogeneous products we find evidence of product differentiation which is impacting prices upwards rather than downwards if health insurance is to benefit fully from generic medicines it ought to encourage faster uptake and price competition and discourage price fixing regulation that ties generic prices to those of originator brands panos kanavos joan costa font and elizabeth seeley

improving environmental valuation estimates through consistent use of revealed and stated preference information abstract environmental valuation data from stated and revealed preference methods are integrated into a unified model of preferences for environmental quality improvement that identifies the use and nonuse components of the total value estimate this articulates clearly what parts of the total value estimate come from each type of data and permits tests of whether estimated preferences satisfy weak complementarity between the environmental good of interest and related private goods the statistical advantages of using more information for the valuation problem are exploited while retaining flexibility to identify value estimates from any individual method of analysis

applied welfare economics with discrete choice models economists have been paying increasing attention to the study of situations in which consumers face a discrete rather than a continuous set of choices such models are potentially very important in evaluating the impact of government programs upon consumer welfare but very little has been said in general regarding the tools of applied welfare economics indiscrete choice situations this paper shows how the conventional methods of applied welfare economics can be modified to handle such cases it focuses on the computation of the excess burden of taxation and the evaluation of quality change the results are applied to stochastic utility models including the popular cases of probit and logit analysis throughout the emphasis is on providing rigorous guidelines for carrying out applied work this abstract was borrowed from another version of this item

combining revealed preference data with stated preference data a latent class approach a substantial literature exists combining data from revealed preference rp and stated preference sp sources aimed either at testing for the convergent validity of the two approaches used in nonmarket valuation or as a means of drawing on their relative strengths to improve the ultimate estimates of value in doing so it is assumed that convergence of the two elicitation approaches is an all or nothing proposition i e the rp and sp data are either consistent with each other or they are not the purpose of this paper is to propose an alternative framework that allows for possible divergence among individuals in terms the consistency between their rp and sp responses in particular we suggest the use of a latent class approach to segment the population into two groups the first group has rp and sp responses that are internally consistent while the remaining group exhibits some form of inconsistent preferences an em algorithm is employed in an empirical application that draws on the alberta and saskatchewan moose hunting data sets used in earlier combined rp and sp exercises the empirical results suggest that somewhere between one third and one half the sample exhibits consistent preferences we also examine differences in welfare estimates drawn from the two classes

limited information and advertising in the u s personal computer industry traditional discrete choice models assume buyers are aware of all products for sale in markets where products change rapidly the full information assumption is untenable i present a discrete choice model of limited consumer information where advertising influences the set of products from which consumers choose to purchase i apply the model to the u s personal computer market where top firms spend over 2 billion annually on advertising i find estimated markups of 19 over production costs where top firms advertise more than average and earn higher than average markups high markups are explained to a large extent by informational asymmetries across consumers where full information models predict markups of one fourth the magnitude i find that estimated product demand curves are biased toward being too elastic under traditional models i show how to use data on media exposure to improve estimated price elasticities in the absence of micro ad data

the necessity for substitute prices recreation demand analyses omitting substitute prices from a travel cost model is shown to cause a significant bias in consumer surplus estimates three sets of travel cost models are developed from a common data base representing 60 000 day users of u s army corps of engineer reservoirs in kansas and missouri the firzt set of models omitted substitute prices the latter two sets included them an analysis of variance test showed that consumer surplus estimates from the first set of models were significantly higher than the other two f 26 2 with 2 20 degrees of freedom the theoretical and practical implications of these findings are discussed economic theory postulates that the demand for a good is a function of its price the price of related goods and services and income still many empirical estimates of demand for recreation sites have ignored the price of substitute recreation sites the most common technique for estimating recreational demand is the travel cost model tcm a comprehensive literature review of the tcm conducted by dwyer kelly and bowes showed that only six of twenty clearly defined tcm demand functions included substitute prices as an argument in the demand function most of the models they reviewed were old but considerable debate remains about incorporating substitutes in the tcm consider the diversity of approaches that have recently been used to incorporate substitute prices into tcm demand functions when modeling recreation demand at corps of engineer reservoirs desvousges smith and mcgivney omitted any

hedonic onsight cost model of recreation demand for many recreational activities onsite pecuniary costs can be a significant portion of the cost of a recreational trip onsite expenditures however often depend upon endogenous quality choices made by the household we formulate a recreation demand model that formally accounts for household selection of quality of onsite time household behavior is constrained by income prices and the onsite hedonic price schedule assuming complete optimization a reduced form marshallian demand curve for recreation trips still results and a specialized version of roy s identity provides a basis for welfare analysis instrumenting for endogenous quality choices does not improve demand estimation

stock market participation family responses to housing consumption commitments as of 2007 many households had taken on very substantial commitments to housing and companion mortgage payments at the same time they held little in the way of a traditional buffer stock of safer liquid assets but were more likely to have opened stock market accounts many of these families when experiencing subsequent mortgage payment difficulties are shown to have been more likely to exit the stock market mortgage difficulties also inhibited families from becoming new stock market participants in this way stocks seem to have likely experienced some direct and indirect collateral damage from the housing market 2007 9

compensating variation consumer s surplus and welfare the compensating variation was defined by j r hicks 1942 as the amount one would have to deduct from a person s income to make him just as well off after a change in prices and income as he had been in the initial situation if the compensating variation is positive the individual is better off under the new situation since the compensating variation furnishes a uniquely defined numerical cardinal indicator of welfare improvement it provides an implicit ranking of alternative prospective situations not only relative to the initial situation but also relative to each other in practice this appears to be how this and other tools of cost benefit analysis are actually used one is interested in knowing not only whether a particular bridge or a particular excise tax will lead to an improvement in welfare but which out of a set of alternative bridges or alternative tax systems will improve welfare the most 1 in this paper we analyze conditions under which the compensating variation can be validly used in this generalized sense these turn out to be precisely the same as conditions previously derived see our 1976 paper for the valid use of consumer s surplus as a welfare measure in our final section we analyze the problem of deriving the generalized equivalent and compensating variations either exactly or approximately from observable demand functions by means of generalizations of or alternatives to consumer s surplus

a comparison of welfare estimates from four models for linking seasonal recreational trips to multinomial logit models of site choice we compare four methods of linking a site choice random utility model to a seasonal trip model the four approaches are those proposed by morey et al 1993 am j agric econom 75 578 592 hausman et al 1995 j public econom 56 1 30 parsons and kealy 1995 j environ econom management29 357 367 and feather et al 1995 j environ econom management29 214 227 we estimate the alternative models using a common data set and calculate a change in welfare for two policy scenarios across the models we find that there is little practical difference between the approaches of morey et al and hausman et al they are nearly the same mathematically and the welfare estimates in our empirical example are quite close the approaches of parsons and kealy and feather et al generated welfare estimates that were substantially different from the previous two approaches as well as from each other they also generated results that reveal the inconsistencies between their site choice and season trip models

pricing profits and technological progress in the pharmaceutical industry the decades old debate over pharmaceutical industry prices profits and innovation has again intensified a number of events coalesced to refocus public interest on pharmaceuticals contributing to public concern were bureau of labor statistics price index increases for pharmaceuticals far outpacing those for the products of other industries another prominent characteristic of the pharmaceutical industry has been its extraordinarily high reported profitability this article examines the phenomena that precipitated the current pharmaceuticals debate their historical antecedents and the principal questions at issue in the author s considered judgment a pell mell march toward regulation of pharmaceutical industry pricing could seriously impair the industry s incentives for investment in new products

augmenting travel cost models with contingent behavior data this paper proposes contingent behavior survey questions as a valuable supplement to observed data in travel cost models of non market demand for recreational resources a set of observed and contingent behavior results for each survey respondent allows the researcher to control for individual heterogeneity by taking advantage of panel data methods when exploring the nature of respondent demands the contingent scenarios also provide opportunities to a test for differences between observed and contingent preferences and or b assess likely demands under conditionsbeyond the domain of observed variation in costs or resource attributes most importantly contingent scenarios allow the researcher to imposeexogenously varying travel costs exogenous imposition of travel costs together with panel methods reduces the omitted variables bias that plagues observed data travel cost models of recreational demand using a convenience sample of data for illustrative purposes we show how to estimate the demand for recreational angling by combining observed and contingent behavior data we begin with simple naive pooled poisson models and progress to more theoretically appropriate fixed effects panel poisson specifications

regulation and pricing of pharmaceuticals reference pricing or price cap regulation we study the relationship between regulatory regimes and pharmaceutical firms pricing strategies using a unique policy experiment from norway which in 2003 introduced a reference price rp system called index pricing for a sub sample of off patent pharmaceuticals replacing the existing price cap pc regulation we estimate the effect of the reform using a product level panel dataset covering the drugs exposed to rp and a large number of drugs still under pc regulation in the time before and after the policy change our results show that rp significantly reduced both brand name and generic prices within the reference group with the effect being stronger for brand names we also identify a negative cross price effect on therapeutic substitutes not included in the rp system in terms of policy implications the results suggest that rp is more effective than pc regulation in lowering drug prices while the cross price effect raises a concern about patent protection

combining revealed and stated preference data to estimate the nonmarket value of ecological services an assessment of the state of the science this paper reviews the marketing transportation and environmental economics literature on the joint estimation of revealed preference rp and stated preference sp data the rp and sp approaches are first described with a focus on the strengths and weaknesses of each recognizing these strengths and weaknesses the potential gains from combining data are described a classification system for combined data that emphasizes the type of data combination and the econometric models used is proposed a methodological review of the literature is pursued based on this classification system examples from the environmental economics literature are highlighted a discussion of the advantages and disadvantages of each type of jointly estimated model is then presented suggestions for future research in particular opportunities for application of these models to environmental quality valuation are presented

tiered co payments pricing and demand in reference price markets for pharmaceuticals health insurance companies curb price insensitive behavior and the moral hazard of insureds by means of cost sharing such as tiered co payments or reference pricing in drug markets this paper evaluates the effect of price limits below which drugs are exempt from co payments on prices and on demand first using a difference in differences estimation strategy we find that the new policy decreases prices by 5 percent for generics and increases prices by 4 percent for brand name drugs in the german reference price market second estimating a nested logit demand model we show that consumers appreciate co payment exempt drugs and calculate lower price elasticities for brand name drugs than for generics this explains the different price responses of brand name and generic drugs and shows that price related co payment tiers are an effective tool to steer demand to low priced drugs

heterogeneity in expectations risk tolerance and household stock shares the attenuation puzzle this article jointly estimates the relationship between stock share and expectations and risk preferences the survey allows individual level quantitative estimates of risk tolerance and of the pe

estimation of random coefficient demand models two empiricists perspective we document the numerical challenges we experienced estimating random coefficient demand models as in berry levinsohn and pakes 1995 using two well known data sets and a thorough optimization design the optimization algorithms often converge at points where the first and second order optimality conditions fail there are also cases of convergence at local optima on convergence the variation in the values of the parameter estimates translates into variation in the models economic predictions price elasticities and changes in consumer and producer welfare following hypothetical merger exercises vary at least by a factor of 2 and up to a factor of 5

endogenously chosen travel costs and the travel cost model an application to mountain biking at moab utah the travel cost model is frequently used to estimate net willingness to pay for recreation at remote sites by using the visitor s travel costs as a proxy for the price of recreation however some concern has been raised over the validity of using the visitor s stated travel costs as a proxy for price this paper addresses some of these concerns by examining the possible over estimation of consumer surplus due to endogenously chosen travel costs this paper extends past theoretical work for the linear model by developing a correction for endogenously chosen travel costs in more commonly used nonlinear models such as the poisson or count data model also provided is the first empirical test of the presence of endogeneity and an estimate of the magnitude of the error from ignoring endogeneity in travel costs after applying this test and the correction to data that was gathered for mountain biking at moab utah the estimate of consumer surplus falls from us 153 to us 135 which is a 12 reduction

competition and collusion in the american automobile industry the 1955 price war movements in total quantity and in quality adjusted price suggest a supply side shock in the american automobile market in 1955 this paper tests the hypothesis that the shock was a transitory change in industry conduct a price war the key ingredients of the test are alternative equilibrium models of oligopoly under product differentiation in nonnested cox tests of hypotheses a collusive solution is sustained in 1954 and in 1956 while a competitive solution holds in 1955 the result does not appear to be an artifact since it is robust in tests against alternative specifications copyright 1987 by blackwell publishing ltd

differential interpretation of public signals and trade in speculative markets most models of trade in speculative markets assume that agents interpret public information identically we provide empirical evidence on the relation between the volume of trade and stock returns around public announcements and we argue that the evidence is inconsistent with this assumption we then develop a model of trade around public announcements that incorporates differential interpretations and is consistent with the observed volume return relation then we test the standard model of belief revision underlying most models of trade using stock brokerage research analysts earnings forecasts the hypthesis of identical interpretations seems inconsistent with the forecast revisions in these data

reference pricing competition and pharmaceutical expenditures theory and evidence from a natural experiment abstract we study the impact of regulation on competition between brand names and generics and pharmaceutical expenditures using a unique policy experiment in norway where reference pricing rp replaced price cap regulation in 2003 for a sub sample of off patent products first we construct a vertical differentiation model to analyze the impact of regulation on prices and market shares of brand names and generics then we exploit a detailed panel data set at product level covering several off patent molecules before and after the policy reform off patent drugs not subject to rp serve as our control group we find that rp significantly reduces both brand name and generic prices and results in significantly lower brand name market shares finally we show that rp has a strong negative effect on average molecule prices suggesting significant cost savings and that patients copayments decrease despite the extra surcharges under rp

generic entry price competition and market segmentation in the prescription drug market abstract this paper studies the effects of generic entry on post patent price competition for 18 prescription drugs recently exposed to competition an independent validating test of the generic competition paradox is conducted using a newly created data set each generic entrant is associated with an average 1 increase in the branded price the one way error component model accounts for intermolecular competition market segmentation and endogeneity of entry and finds branded prices increasing by 2 alternative definitions of entry suggest that price competition is confined to the generic market the unique payer type feature of the data offers empirical evidence supporting market segmentation

the economics of fish consumption advisories insights from revealed and stated preference data measuring how fish consumption advisories affect angler s utility has proven difficult relying on stated preference sp data is problematic because of hypothetical bias revealed preference rp data benefits from using actual behavior however co linearity often makes it difficult to model the array of advisory severity levels across different species and catch rates the array of advisories also makes traditional joint estimation impractical this paper describes an alternative joint estimation technique based on an index of sp parameter that we used for estimating the effect of fish consumption advisories on the fox river green bay

environmental quality preference and benefit estimation in multinomial probit models a simulation approach simulated maximum likelihood is used to estimate a random parameter multinomial probit model of destination choice for recreational fishing trips formulated to accommodate varying tastes and varying perceptions of environmental quality across individuals the restricted likelihood ratio test strongly rejects the independent probit model which is similar to the independent logit model in both the parameter and benefit estimates furthermore both the krinsky robb and bootstrapping procedures suggest that the benefit standard deviation of an environmental policy is found to be markedly lower higher when heterogeneous preferences are taken into account

are stated preferences good predictors of market behavior using an economic experiment in conjunction with a survey we analyze whether consumers hypothetical willingness to pay responses are effective predictors of actual market behavior we model revealed preferences as a function of socio demographic characteristics and instrumental variables that represent the intensity of stated preferences our findings show that consumers who state that they are willing to pay a premium which is equal to or greater than a positive lower bound have a higher likelihood of actually buying the product in question this implies that consumers actions in the economic experiment validate their survey responses

on measuring existence value the prevailing consensus that existence value can only be measured by contingent valuation is questioned the concern is over pure existence value a change in welfare when a public good changes that leaves no trace in behavior pure existence value may well be more a consequence of the simple models used to characterize nonuse value than a reflection of how people value public goods if so nonuse value can in principle be obtained from observing behavior as well as from asking questions which offers a prospect for cross checks and corroboration using both approaches some possibilities for empirical measurement are suggested

a welfare estimation of beach recreation with aggregate data a single site travel cost recreation demand model for a representative agent visiting a beach is employed that uses an indirect utility function alternative specifications of the expected demand function are estimated with aggregate time series data from a local beach park the estimated parameters are used to compute the value of the consumer surplus the recreational value of the park is expectedly sensitive to the functional form used also own price and income elasticities for various functional forms vary the results from the box cox procedure suggest that the semi log function is the most appropriate for the data used in this study confidence intervals are calculated to deal with the reliability problem of the consumer surplus estimates an alternative algorithm which assumes omitted variable as the source of the error in the demand function is also presented

on the aggregate value of recreational activities a nested price index approach using poisson demand systems an important consideration in the development ofregulations and policies that administer naturalresources in an area is the value of the non marketactivities supported by those lands little attentionhas been paid to the aggregate value of largegeographic areas this analysis builds autility theoretic price index and utilizes this indexto estimate an aggregate poisson demand to valuebackcountry recreational hiking opportunities innorthern california

gps shifting agencies in choice of treatment earlier studies have shown that general practitioners gps prescription choices are influenced by effect patient costs and costs to society patient attitude and own experience this study builds on this knowledge and explores how prescription behaviour is affected when choices are made in different contexts where the conflicting roles as agents for the patient and agents for society are stressed a total of 309 danish gps were randomly allocated to one of three versions of a web based questionnaire which included a discrete choice experiment mixed logit models in willingness to pay wtp space were estimated with and without accounting for stated attribute non attendance results show that the gp s role as agent for his patients is clearly strengthened in the presence of national recommendations in contrast when recommendations are not present and when gps face a patient who is currently taking an expensive albeit effective medication the gp takes on his role as agent for society we find no evi

regulation of pharmaceutical prices evidence from a reference price reform in denmark reference price systems for prescription drugs constitute widely adopted cost containment tools under these regimes patients co pay a fraction of the difference between a drug s pharmacy retail price and a reference price that is set by the government reference prices are either externally based on drug prices in other countries or internally based on domestic drug prices determined we study the effects of a change from external to internal reference pricing in denmark in 2005 we find that the reform led to substantial reductions in retail prices reference prices and patient co payments as well as to sizable decreases in overall producer revenues and health care expenditures the reform induced consumers to substitute away from branded drugs for which we estimate strong preferences the increase in consumer welfare due to the reform therefore depends on whether or not we take perceived quality differences into account in its calculation

a difficulty with the travel cost method instead of observable prices of recreational visits travel cost method tcm re searchers are obliged to substitute researcher assigned visitation cost estimates i argue that visitation costs are inherently subjective but are ordinally measurable so long as the cost in creases with distance travelled it follows that traditional tcm yields only ordinally measur able welfare estimates the household produc tion function formulation of tcm resolves this problem only by imposing severe and un testable analytical restrictions tcm cannot serve as a stand alone technique for estimating recreation benefits rather it must be calibrated using information generated with fundamentally different methods jel q26

competition and the reference pricing scheme for pharmaceuticals by introducing n 1 firms with infinite cross price elasticity i e generic drugs we explore the effects of competition on the optimal pricing strategies under a reference pricing scheme rps a two stage model repeated infinite number of times is presented when stage 1 is competitive the equilibrium in pure strategies exists and is efficient only if the reference price r does not depend on the price of the branded product when generics collude the way r is designed is crucial for both the stability of the cartel among generics and the collusive prices in equilibrium an optimally designed rps must set r as a function only of the infinitely elastic side of the market and should provide the right incentives for competition

when kahneman meets manski using dual systems of reasoning to interpret subjective expectations of equity returns to understand how decisions to invest in stocks are taken economists need to elicit expectations relative to expected risk return trade off one of the few surveys which have included such questions is the survey of economic expectations in 1999 2001 using this survey dominitz and manski find an important heterogeneity across respondents that can hardly be accounted for by simple models of expectations formation this paper claims that much of the heterogeneity derives from pathologies affecting respondents adapting a principle of dual reasoning borrowed from kahneman we classify respondents according to their sensitivity to these pathologies and find a strong homogeneity across the less sensitive respondents we then sketch a model of expectation formation

improving the numerical performance of static and dynamic aggregate discrete choice random coefficients demand estimation the widely used estimator of berry levinsohn and pakes 1995 p roduces estimates of consumer preferences from a discrete choice demand model with random coefficients market level demand shocks and endogenous prices we derive numerical theory results characterizing the properties of the nested fixed point algorithm used to evaluate the objective function of blp s estimator we discuss problems with typical implementations including cases that can lead to incorrect parameter estimates as a solution we recast estimation as a mathematical program with equilibrium constraints which can be faster and which avoids the numerical issues associated with nested inner loops the advantages are even more pronounced for forward looking demand models where the bellman equation must also be solved repeatedly several monte carlo and real data experiments support our numerical concerns about the nested fixed point approach and the advantages of constrained optimization for static blp the constrained optimization approach can be as much as ten to forty times faster for large dimensional problems with many markets

brand choice and purchase frequency revisited an application to recreation behavior the role that total purchases play in determining the choice among brands has been considered in microeconomic theory for quite some time but for traditional goods only consumption of outdoor recreation is an unusual good most often measured using an individual s recreational trip adding the trips made on a number of choice occasions seems the obvious way to aggregate this good but doing so leads to several problems in defining a meaningful price index the hicks leontief conditions for aggregation suggest that trips to destinations may be thought of as brand choices on consumption occasions andthe continuous analogue to total purchases may in fact be the individual s total travel an empirical example of the model is used to estimate welfare impacts for a group of anglers

an analysis of joint costs in a managed forest ecosystem abstract this paper analyzes the tenability of line item budgeting and independently determined output costs for a managed forest ecosystem the general problem of cost allocation in a joint production system is discussed as one of choosing paths of integration a production structure is hypothesized for describing a managed forest ecosystem and its characteristics of jointness are discussed finally an empirical case example is presented which indicates that cost estimates and associated means of production which result from single output costing procedures and from joint costing procedures may be significantly different in a managed forest ecosystem

intra regional amenities wages and home prices the role of forests in the southwest forests provide non market goods and services that people are implicitly willing to pay for through hedonic housing and labor markets but it is unclear if compensating differentials arise in these markets at the regional level this empirical question is addressed in a study of arizona and new mexico hedonicregressionsofhousingpricesandwagesusing census and geographic data show that forest area carries an implicit price of between 27 and 36 per square mile annually compensating differentials at the regional level suggest that care must be taken when applying the travel cost method to value regionallydelineated characteristics jel q23 r14

price and welfare effects of a pharmaceutical substitution reform the price effects of the swedish pharmaceutical substitution reform are analyzed using data for a panel of all pharmaceutical product sold in sweden in 1997 2007 the price reduction due to the reform was estimated to average 10 and was found to be significantly larger for brand name pharmaceuticals than for generics the results also imply that the reform amplified the effect that generic entry has on brand name prices by a factor of 10 results of a demand estimation imply that the price reductions increased total pharmaceutical consumption by 8 and consumer welfare by sek 2 7 billion annually

recession depression mental health effects of the 2008 stock market crash do sudden large wealth losses affect mental health we use exogenous variation in the interview dates of the 2008 health and retirement study to assess the impact of large wealth losses on mental health among older u s adults we compare cross wave changes in wealth and mental health for respondents interviewed before and after the october 2008 stock market crash we find that the crash reduced wealth and increased feelings of depression and use of antidepressant drugs and that these effects were largest among respondents with high levels of stock holdings prior to the crash these results suggest that sudden wealth losses cause immediate declines in subjective measures of mental health however we find no evidence that wealth losses lead to increases in clinically validated measures of depressive symptoms or indicators of depression

spatial preference heterogeneity in forest recreation abstract in this study we analyze the preferences for recreational use of forests in lorraine northeastern france applying stated preference data our approach allows us to estimate individual specific preferences for recreational use of different forest types these estimates are used in a second stage of the analysis where we test whether preferences depend on access to recreation sites we find that there is significant preference heterogeneity with respect to most forest attributes the spatial analysis shows that preferences for forests with parking and picnic facilities are correlated with having access to such forests while for the other attributes considered dominant tree species trekking paths and presence of lake and rivers we find no correlation between stated preferences and accessibility this implies that the problem of endogenous distances in the travel cost method parsons 1991 may be present in the estimation of welfare economic values for parking and picnic facilities in the analyzed model the results underline the importance of considering spatial heterogeneity of preferences carrying out economic valuation of spatial delineated environmental goods and that the spatial variation in willingness to pay for such goods is not only explained by the users transport costs of accessing the sites

price structure in two sided markets evidence from the magazine industry we present and estimate a model of competition in a two sided market the market for magazine readership and advertising using data on magazines in germany we find evidence that magazines have properties of two sided markets the results are consistent with the perception that prices for readers are subsidized and that magazines make all their money from advertisers consistent with advertisers valuing readers more than readers value advertisements our results imply that higher demand on the reader side increases ad rates but that higher demand on the advertising side decreases cover prices

stock market crash and expectations of american households this paper utilizes data on subjective probabilities to study the impact of the stock market crash of 2008 on households expectations about the returns on the stock market index we use data from the health and retirement study that was fielded in february 2008 through february 2009 the effect of the crash is identified from the date of the interview which is shown to be exogenous to previous stock market expectations we estimate the effect of the crash on the population average of expected returns the population average of the uncertainty about returns subjective standard deviation and the cross sectional heterogeneity in expected returns disagreement we show estimates from simple reduced form regressions on probability answers as well as from a more structural model that focuses on the parameters of interest and separates survey noise from relevant heterogeneity we find a temporary increase in the population average of expectations and uncertainty right after the crash the effect on cross sectional heterogeneity is more significant and longer lasting which implies substantial long term increase in disagreement the increase in disagreement is larger among the stockholders the more informed and those with higher cognitive capacity and disagreement co moves with trading volume and volatility in the market