state dependence and heterogeneity in fishing location choice to explore the distinction between state dependence and heterogeneity in repeated decisions this paper combines a mixed logit model with a state dependence parameterization from the marketing literature to study fishing location choices of commercial sea urchin divers in california it examines implications of ignoring either effect and finds in all cases that true state dependence is an important determinant of location choice consequently spatial policies like marine reserves can lead to differences in the short and long run behavioral responses of the fishing fleet under some specifications random preference parameters are statistically significant when state dependence is excluded from the model but when it is included random preference parameters are not significant in other specifications including state dependence only dampens the variability in preference parameters these results highlight the importance of gathering and analyzing diary type data for commercial fisheries as well as for similar choice problems in recreation demand

nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

the link between response time and preference variance and processing heterogeneity in stated choice experiments abstract in this article we utilize the time respondents require to answer a self administered online stated preference survey while the effects of response time have been previously explored this article proposes a different approach that explicitly recognizes the highly equivocal relationship between response time and respondents choices in particular we attempt to disentangle preference variance and processing heterogeneity and explore whether response time helps to explain these three types of heterogeneity for this we divide the data ordered by response time into approximately equal sized subsets and then derive different class membership probabilities for each subset we estimate a large number of candidate models and subsequently conduct a frequentist based model averaging approach using information criteria to derive weights of evidence for each model our findings show a clear link between response time and utility coefficients error variance and processing strategies our results thus emphasize the importance of considering response time when modeling stated choice data

handling unobserved site characteristics in random utility models of recreation demand abstract this paper presents a new random utility model of recreation demand that addresses the unobserved characteristics of recreation sites most random utility recreation demand models implicitly assume that all relevant site characteristics are observed by the researcher or allow for the possibility of unobserved characteristics in a restrictive manner unlike traditional approaches the proposed model avoids the bias unobserved site characteristics can cause in welfare estimates and the travel cost parameter monte carlo simulations motivate the proposed model by showing that it provides more efficient parameter estimates in contrast existing methods yield less efficient estimates and biased standard errors that overstate precision an empirical application to recreational fishing in wisconsin illustrates the potential importance of this modeling innovation in this application controlling for unobserved characteristics is important for a range of model specifications

avoiding some costs of inflation and crawling toward hyperinflation the case of the brazilian domestic currency substitute the pattern of a classical hyperinflation is an acute acceleration of the inflation level accompanied by rapid substitution away from domestic currency until the real plan 1 july 1994 however brazil experienced inflation levels well above 1000 a year since 1988 without entering the classical hyperinflation path two elements played key roles in differentiating the brazilian case from the classical hyperinflations indexation and the provision of a reliable domestic currency substitute i e the provision of liquidity to interest bearing assets this paper claims that the existence of this domestic currency substitute was the main source of both the inability of the brazilian central bank to fight inflation and of the unwillingness of brazilians to face the costs of such a fight the provision of the domestic currency substitute through the banking sector is modeled and the main macroeconomic consequences of this monetary regime are derived those are the lack of a nominal anchor for the price system due to the passive monetary policy and the non controllability of seigniorage unlike traditional models of hyperinflations

measuring heterogeneous preferences for cattle traits among cattle keeping households in east africa this study employs mixed logit and latent class models to examine preferences for cattle traits with a focus on heterogeneity among cattle keepers using choice experiment data of 506 cattle keeping households in kenya and ethiopia the findings indicate the existence of preference heterogeneity based on cattle production systems highly valued cattle traits for the cropping systems include traction fitness and trypanotolerance while traits associated with herd increase are considered important in pastoral systems considering heterogeneity within population segments provides a framework for adapting breeding policy interventions to specific producer segments by integrating preferred traits in a breed improvement program

benefit estimates for landscape improvements sequential bayesian design and respondents rationality in a choice experiment a multi attribute stated preference approach is used to value low and high impact actions on four major landscape components addressed by the rural environment protection scheme in ireland several methodological issues are addressed the use of prior beliefs on the relative magnitudes of parameters standardized description of different levels of landscape improvements via image manipulation software adoption of efficiency increasing sequential experimental design and sensitivity of benefit estimates to inclusion of responses from irrational respondents results suggest that bayesian design updating delivers significant efficiency gains without loss in respondent efficiency and estimates are upward biased when irrational respondents are included

the collapse of purchasing power parities during the 1970 s one of the striking facts concerning the relationship beiveen prices and exchange rates during the 1970 s has been the dismal performance of the predictions of the simple versions of the purchasing power parity doctrine ppp that doctrine in its absolute version states that the equilibrium exchange rate between domestic and foreign currencies equals the ratio of domestic to foreign price levels the relative version of the doctrine relates equilibrium changes in exchange rates to changes in the ratio of domestic to foreign prices during the 1970 s short run changes in exchange rates bore little relationship to short run differentials in national inflation rates and frequently divergences from purchasing power parities have been cumulative this paper reviews and analyzes the empirical record of exchange rates and prices during the 1970 s and the analysis is based on the experience of the dollar pound the dollar frecch franc and the dollar dm exchange rates section 2 presents the evidence on ppp during the 1970 s and contrasts it with the evidence from the 1920 s a period during which the doctrine held up reasonably well this analysis is relevant for assessing whether the flexible exchange rate system was successful in providing national economies with an added degree of insulation from foreign shocks and whether it provided policymakers with an added instrument for the conduct of macroeconomic policy the evidence regarding devia tions from purchasing power parities is also relevant for determining whether there is a case for managed float section 3 attempts to explain what went wrong with

testing benefits transfer of forest recreation values over a twenty year time horizon we conduct a functional benefit transfer over 20 years of total willingness to pay based on carborne forest recreation in 52 forests using a mixed logit specification of a random utility model and geographic information systems to allow heterogeneous preferences across the population and for heterogeneity over space results show that preferences for some forest attributes such as species diversity and age as well as transport mode have changed significantly over the period updating the transfer model with present total demand for recreation improves the error margins by an average of 282 average errors of the best transfer model remain 25

consumers willingness to pay for the color of salmon a choice experiment with real economic incentives in most retail markets sellers post the price and consumers choose which products to buy we designed an experimental market with posted prices to investigate consumers willingness to pay for the color of salmon salmon fillets varying in color and price were displayed in twenty choice scenarios in each scenario the participants chose which of two salmon fillets they wanted to buy to induce real economic incentives each participant drew one binding scenario the participants then had to buy the salmon fillet they had chosen in their binding scenario the choice data were analyzed with a mixed logit model

time consistent collection of optimal seigniorage a unifying framework this paper reviews the existing literature on the time consistency problem of seigniorage collection when monetary policy is determined by optimal taxation considerations it develops a unifying accounting framework and suggests a general measure for seigniorage which encompasses the standard measures employed in the literature in addition the ex ante optimal solution to the optimal taxation problem is derived and interpreted in relation to the ramsey principle we show that the different recommendations of the public finance literature i e the friedman rule of optimal deflation moderately positive inflation and seigniorage maximizing inflation are specific solutions to the optimal taxation problem the paper continues with a formal illustration of the time consistency problem of the ex ante optimal policy and the characterization of the time consistent solution under discretion as possible solutions to the time consistency problem we consider reputational forces institutional reforms that establish central bank independence and specific ways of asset and debt management in particular it is formally shown that a modified version of the asset and debt management scheme suggested by persson persson and svensson is not only necessary but also sufficient for optimality although this did not hold in their model

union wage setting and exchange rate policy the performance of an optimally managed float is compared with that of a credibly fixed exchange rate in a small open economy framework where wages are set by a monopoly union two key results emerge first a sufficient condition for the managed float to outperform a fixed rate is that the union be no less inflation averse than society second introducing an inflation target into the central bank s loss function ensures the superiority of the managed float regardless of the weight attached to inflation by the union both results reflect the sensitivity of the union mark up to the policy regime

purchasing power parity and relative price variability evidence from the 1970s abstract one curious fact to emerge from the return to flexible exchange rates in the 1970s was the failure of empirical tests of simple versions of the purchasing power parity ppp doctrine this paper seeks to establish whether that observed poor performance of ppp can be attributed to uncertainty regarding the rate of inflation due to the large variations in relative prices experienced during the 1970s the evidence is found to be unsupportive of the notion

measuring the consumer benefits of improving farm animal welfare to inform welfare labelling abstract policy makers in the european union are envisioning the introduction of a community farm animal welfare label which would allow consumers to align their consumption habits with their farm animal welfare preferences for welfare labelling to be viable the market for livestock products produced to higher welfare standards has to be sufficiently segmented with consumers having sufficiently distinct and behaviourally consistent preferences the present study investigates consumers preferences for meat produced to different welfare standards using a hypothetical welfare score data is obtained from a contingent valuation study carried out in britain the ordered probit model was estimated using bayesian inference to obtain mean willingness to pay we find decreasing marginal wtp as animal welfare levels increase and that people s preferences for different levels of farm animal welfare are sufficiently differentiated making the introduction of a labelling scheme in the form of a certified rating system appear feasible

testing commitment cost theory in choice experiments in choice experiments it is commonly assumed that individuals make choices in static and certainty decision making conditions real world choices however are usually made in a dynamic setting committing a purchase decision under conditions of uncertainty might have a commitment cost cc in this study we test cc theory using a nonhypothetical choice experiment specifically we test whether choice behavior and willingness to pay estimates differ when individuals have the option to gain present or delayed information or reverse the transaction our results suggest that the construction of a dynamic decision context can be relevant in the design of choice experiments

testing choice experiment for benefit transfer with preference heterogeneity benefit transfer is a cost effective method for estimating the value of environmental goods that relies on information obtained in previous studies the multiattribute approach of choice experiments should provide advantages in terms of benefit transfer allowing differences in environmental improvements between sites as well as differences in socioeconomic and attitude characteristics between respondent populations this article investigates the capability of choice experiment method to be used in environmental benefit transfer when a random parameters approach is used to allow for preference heterogeneity we find that the inclusion of respondents taste heterogeneity reduces the magnitude of the transfer error

a stated preference valuation of the non market benefits of pollination services in the uk using a choice experiment survey this study examines the uk public s willingness to pay to conserve insect pollinators in relation to the levels of two pollination service benefits maintaining local produce supplies and the aesthetic benefits of diverse wildflower assemblages willingness to pay was estimated using a bayesian mixed logit with two contrasting controls for attribute non attendance exclusion and shrinkage the results suggest that the uk public have an extremely strong preference to avoid a status quo scenario where pollinator populations and pollination services decline total willingness to pay was high and did not significantly vary between the two pollination service outputs producing a conservative total of 379m over a sample of the tax paying population of the uk equivalent to 13 4 per uk taxpayer using a basic production function approach the marginal value of pollination services to these attributes is also extrapolated the study discusses the implications of these findings and directions for related future research into the non market value of pollination and other ecosystem services

an international comparison of prices and exchange rates a new test of purchasing power parity abstract this paper introduces a new approach based on divisia index numbers to test ppp with both short run and long run data for all major currencies simultaneously the short run results indicate that the predictions of ppp do not hold up at all well on the other hand however the long run data are quite consistent with the ppp hypothesis the results also identify five years as a broad measure of the length of the long run insolar as ppp is concerned

a new paradigm for valuing non market goods using referendum data maximum likelihood estimation by censored logistic regression abstract this paper challenges the w m hanemann amer j agr econom 66 332 341 1984 and c sellar j p chavas and j r stoll j environ econom management 13 382 390 1986 utilizations of logit models to estimate the value of non market resources from referendum survey data these data are more informative than conventional choice data the random utility interpretation of logit models is therefore too restrictive bypassing the utility function entirely it will be shown that parameters and standard errors for utility theoretic inverse hicksian demand functions can be extracted directly and much more simply estimated demand functions need not be limited to those corresponding to the linear in parameters utility difference specifications which can be handled by packaged logit programs

public goods and the value of product quality regulations the case of food safety abstract the paper examines preferences for product quality regulations our premise is that preferences for product quality regulations derive from preferences for both private and public goods the model is used to explain public attitudes toward a referendum measure to eliminate pesticide residues on food results from a survey of consumers are consistent with the conceptual model and show that preferences for public goods influence support for the product quality regulation the results help explain why consumption behavior is a poor predictor of political behavior and have implications for methods that use voting and market behavior to value public goods

information customization and food choice in this article we employ a hypothetical discrete choice experiment dce to examine how much consumers are willing to pay to use technology to customize their food shopping we conjecture that customized information provision can aid in the composition of a healthier shop our results reveal that consumers are prepared to pay relatively more for individual specific information as opposed to generic nutritional information that is typically provided on food labels in arriving at these results we have examined various model specifications including those that make use of ex post de briefing questions on attribute non attendance and attribute ranking information and those that consider the time taken to complete the survey our main results are robust to the various model specifications we examine

time consistency indexation and the costs of inflation abstract we examine the effects of indexation measures on inflation costs of inflation and economic welfare within the barro gordon journal of political economy 1983 91 589 610 model the main result is that wage indexation in addition to making the phillips curve steeper also reduces the marginal cost of inflation which is inflationary

embracing model uncertainty strategies for response pooling and model averaging econometricians modeling stated preference sp data and most other types of data are confronted with the uncomfortable reality that our knowledge of the true model is limited with only certain variables suggested by the application at hand and general classes of functional forms and error structures suggested by the literature accepting our limited knowledge we pursue strategies for analyzing sp data that are more robust to uncertainties in our knowledge of the true model these include non parametric and parametric likelihood based tests of pooling responses from different elicitation formats and a frequentist based model averaging approach for estimating willingness to pay functions we argue that these strategies lead to increased econometric integrity and empower the ultimate users of models such as policy decision makers and even juries to better assess the robustness of the results we apply these approaches to an sp survey of saltwater angling in alaska which utilized split sample rankings and ratings elicitation methods while an important goal of our paper is to develop practicable modeling strategies that will ultimately lead to more robust conclusions and more confidence by the users of sp results an equally important goal is to engender a critical discussion of how we can make the analysis of sp data more robust

purchasing power parity in the long run a test of the dollar pound exchange rate 1890 1978 this paper tests the purchasing power parity ppp hypothesis by analyzing t he long run tendency of the dollar pound exchange rate using data sin ce 1890 two different models are considered 1 a na ive model and 2 a modified monetary model the conditions of propor tionality and symmetry cannot be rejected when using the naive model the final results using the monetary model however indicate that t he existence of permanent deviations from ppp cannot be ruled out copyright 1987 by ohio state university press

model selection for the mixed logit with bayesian estimation in this paper the mixed logit ml using bayesian methods was employed to examine willingness to pay wtp to consume bread produced with reduced levels of pesticides so as to ameliorate environmental quality from data generated by a choice experiment model comparison used the marginal likelihood which is preferable for bayesian model comparison and testing models containing constant and random parameters for a number of distributions were considered along with models in preference space and wtp space as well as those allowing for misreporting we found strong support for the ml estimated in wtp space little support for fixing the price coefficient a common practice advocated and adopted in the environmental economics literature and weak evidence for misreporting

fiscal restraints and voter welfare this paper explores the logic of fiscal restraints in a political agency model with both moral hazard and adverse selection the role of the political process is both to discipline incumbents who may act against the public interest and to sort in those politicians who are most likely act in voters interests we use the model to examine the optimality of inefficient taxation limits on the size of government increasing transparency and yardstick competition some conclusions are surprising for example we show that some forms of fiscal restraint can only be desirable when incumbents are sufficiently likely to be benevolent

the indexation of wages and bonds in brazil this paper analyses the dynamic relationship between the degrees of indexation of wages and public bonds in brazil a simple model is constructed to show that both degrees of indexation are determined simultaneously we apply cointegration techniques and estimate error correction representations to assess the temporal causality between them our results provide empirical support for the existence of simultaneity in the degrees of indexation in brazil in the period 1980 93

willingness to pay for other species well being abstract benefit cost analysis of environmental policies typically focuses on benefits to human health and well being for other species economists have attempted to measure human wtp for changes in the numbers of individuals for different types of wildlife and to preserve biodiversity when it comes to humans wtp for improvements in the quality of life for other species however the evidence is limited morbidity and quality of life considerations may be particularly important to the task of valuing non fatal harm to wildlife in the wake of an environmental disaster we argue that the other species morbidity reduction component of wtp should be calculated net of any outrage component associated with the cause of the harm this net wtp is likely to be correlated with the premium that people are willing to pay for chicken products from birds for which the quality of life has been enhanced by improved animal welfare measures this paper uses a conjoint choice stated preference survey to reveal the nature of systematic heterogeneity in preferences for humanely raised versus conventionally raised chicken we also use latent class analysis to distinguish between two classes of people those who are willing to pay a premium for humanely raised chicken and those who are not

goods diversion and repressed inflation notes on the political economy of price liberalization most analyses of parallel markets in centrally planned systems focus on queue rationing as the mechanism whereby state sector goods become available for second economy resale this article takes into account employee diversion of goods as a second channel through which merchandise can move to private markets diversion of goods tends to temper the adverse distributional consequences of price liberalization as repressed inflation increases more goods are diverted out of the state sector and the likelihood that an individual will be made worse off by a transition of free prices is diminished

deadweight costs and the size of government abstract we provide a model for analyzing effects of the tax system and spending programs on the determination of government spending and taxpayer welfare an improvement in the efficiency of either taxes or spending would reduce political pressure for suppressing the growth of government and thereby increase total tax revenue and spending we demonstrate the similarity of the political responses to revenue shocks spending shocks changes in tax efficiency and changes in spending program efficiency empirical analysis of oil shocks intergovernmental grants and other autonomous changes in taxes or spending indicates that cause and effect is not only from spending to tax structures

consumer benefits of labels and bans on gm foods choice experiments with swedish consumers the european union has been relatively cautious about using biotechnology in food production a label regime combined with the right of individual member states to ban introduction of new genetically modified gm strains means that gm food products in effect are banned in many countries we show how it is possible to empirically test whether a ban can be motivated by reference to potential negative externalities this is followed up by results from a choice experiment we cannot reject the hypothesis of equal wtp for a ban and a labeling scheme

contract cheating the market in essays we conduct the first empirical economic investigation of the decision to cheat by university students we investigate student demand for essays using hypothetical discrete choice experiments in conjunction with consequential holt laury gambles to derive subjects risk preferences students stated willingness to participate in the essay market and their valuation of purchased essays vary with the characteristics of student and institutional environment risk preferring students those working in a non native language and those believing they will attain a lower grade are willing to pay more purchase likelihoods and essay valuations decline as the probability of detection and associated penalty increase

the measurement of inflation a stochastic approach the stochastic approach to index number theory views each commodity price change as an independent observation on the underlying rate of inflation so that inflation can be estimated by averaging over all the prices this article extends the approach by a allowing for sustained changes in relative prices b showing the link with divisia index numbers and c deriving standard errors for the inflation estimates the results are illustrated with australian data

america s historical experience with low inflation the inflation of the 1970s was a marked deviation from america s typical peacetime historical pattern as a hard money country we should expect america to continue to be a hard money low inflation country in the future at least in peacetime the low rate of future inflation that we thus forecast changes the balance of macroeconomic risks and opportunities the risk of debt deflation mediated recessions is somewhat higher because a low trend rate of goods and services price index inflation somewhat increases the chances of deflation but it does not raise such risks as much as one might think the failure of the fisher effect to hold empirically means that a low inflation era will in all likelihood be a high real interest rate era but such high real interest rates do not appear to significantly discourage investment or growth

combining discrete and continuous representations of preference heterogeneity a latent class approach unobserved preference heterogeneity has been widely recognized as a critical issue not only for modelling choice behaviour but also for policy analysis this paper examines alternative approaches for incorporating heterogeneity in recreational demand we apply a hybrid model combining discrete and continuous heterogeneity representations of tastes to capture the defining features of both the latent class and the random parameter logit specifications this model allows for the joint estimation of discrete segments and within segment heterogeneity providing a richer interpretation of preference heterogeneity a database of recreational trips to forest sites in mallorca has been used to compare the empirical performance of this hybrid approach with common specifications such as the conditional logit the random parameter logit and the latent class model

deflation and monetary policy in a historical perspective remembering the past or being condemned to repeat it inflation is currently low and stable in industrialized countries but might deflation replace inflation as a major policy concern we present a broad cross country historical study of deflation over the past two centuries in order to shed light on current policy challenges in the light of the relevant theoretical approaches we empirically characterize good bad and ugly deflations assess similarities between the current low inflation environment and that of the gold standard period and discuss lessons from the historical record as to policies to escape undesirable deflation and the relative merits of interest rate and monetary instruments michael bordo and andrew filardo

the economic benefits of reducing the environmental effects of landfills heterogeneous distance decay effects this paper estimates the economic benefits of different alternative policies considered for reducing the external effects caused by the utilization of landfills in solid waste management the preferences of the local population in the surrounding areas of a landfill are evaluated utilizing a discrete choice experiment in which subjects are presented with alternative policy decisions that involve reducing the material processed through the landfill various models were employed in order to capture heterogeneous preferences resulting in a mixture of normals modelling approach mn mnl outperforming other alternative models of heterogeneity the results show that the policy of moving the landfill away from the population does not provide the most benefits when compared to a policy of increasing recycling in the household the economic benefits of the waste management policies are heterogeneous across the population surrounding the landfill and so the distance decay functions thus the economic benefits for most waste management policies can increase or decrease the further away the subject lives from the landfill depending on the preferences of his her segment and the type of policy employed

deriving and testing efficient estimates of wtp distributions in destination choice models estimation of welfare measures is often a dominant driver in the empirical literature on nonmarket valuation to this end qualitative choice models based on random utility theory have been widely employed in outdoor recreation studies a frequent goal of applied studies has been the estimation of welfare changes associated with site attribute changes at recreation sites in order to inform regulatory policy and resource management we review the evolution of the methodology of random utility theory in this field with a focus on taste heterogeneity models and then focus on the recent proposal of specifying utility in the wtp space train k weeks m 2005 discrete choice models in preference space and willing to pay space in scarpa r alberini a eds applications of simulation methods in environmental and resource economics chapter 1 springer dordrecht pp 1 16 our empirical application is on outdoor alpine recreation data we emphasize the efficiency and direct testing that using the maximum simulated likelihood estimator affords to practitioners using the wtp space approach and illustrate these with examples

relative price changes as aggregate supply shocks this paper proposes a theory of supply shocks or shifts in the short run phillips curve based on relative price changes and frictions in nominal price adjustment when price adjustment is costly firms adjust to large shocks but not to small shocks and so large shocks have disproportionate effects on the price level therefore aggregate inflation depends on the distribution of relative price changes inflation rises when the distribution is skewed to the right and falls when the distribution is skewed to the left we show that this theoretical result explains a large fraction of movements in postwar u s inflation moreover our model suggests measures of supply shocks that perform better than traditional measures such as the relative prices of food and energy

a model of uk real effective exchange rate behaviour an integrated model of the uk real effective exchange rate is examined which links purchasing power parity with trade flow and asset market mechanisms furthermore time series and econometric analysis using quarterly data from 1972 to 1987 are applied the results obtained are broadly consistent with this model and imply that the uk real effective exchange rate index is constant in the long run

forecasting pre world war i inflation the fisher effect and the gold standard we examine interest and inflation rates from 1879 to 1913 deflation prior to 1896 was followed by inflation average u s inflation was 3 1 percentage points higher in the years after 1896 yet nominal interest rates were no higher after 1896 this nonadjustment of nominal rates would be consistent with rational expectations if inflation was not forecastable and indeed univariate tests show little sign of serial correlation but gold production does forecast inflation the relationship between mining and inflation was such that expected inflation should have risen 300 basis points between 1890 and 1910 we consider explanations of this failure to foresee the shift in inflation after 1896 and conclude that it is not persuasive evidence that investors ignored relevant information but does suggest great uncertainty about the appropriate model for analyzing the economy

modeling disinterest and dislike a bounded bayesian mixed logit model of the uk market for gm food mixed logit models represent a powerful discrete choice analytical model but require assumptions about the functional form of the parameter distributions the use of unbounded distributions such as the normal distribution may be regarded as unsuitable where theory indicates that all are negatively affected by increases in an attribute such as price bounded distributions such as the triangular and log normal are unable to model the case where a section of the population is indifferent towards an attribute while the remainder are negatively disposed toward it train and sonnier s bounded mixed logit model accommodates these features and is employed in this paper a censored normal and johnson s s b distribution are used to model preferences in the uk for food attributes including price and gm technology bi modal distributions are identified regarding gm food some are unlikely to ever consume it some are close to indifference and willing to consume at relatively small discounts while the remainder are fairly unresponsive to further price reductions

optimal contract length in a reputational model of monetary policy we develop a reputational model of monetary policy with endogenous contract length in choosing contract length private sector agents trade off recontracting costs against the expected costs resulting from trading under contracts based on incorrect inflation expectations however due to an externality the private and socially optimal contract lengths differ when selecting individual contract length private agents do not consider the effect of contract length on the surprise inflation output trade off in a reputational model of monetary policy this results in an excessive equilibrium inflation rate the socially optimal outcome may be achieved by public policies that reduce recontracting costs

exploring scale effects of best worst rank ordered choice data to estimate benefits of tourism in alpine grazing commons in many environmental valuation applications standard sample sizes for choice modelling surveys are impractical to achieve one can improve data quality using more in depth surveys administered to fewer respondents we report on a study using high quality rank ordered data elicited with the best worst approach the resulting exploded logit choice model estimated on 64 responses per person was used to study the willingness to pay for external benefits by visitors for policies which maintain the cultural heritage of alpine grazing commons we find evidence supporting this approach and reasonable estimates of mean wtp which appear theoretically valid and policy informative

stability of willingness to pay for coastal management a choice experiment across three time periods a key assumption of stated preference methods is that individuals have well formed preferences that are robust over time both the discovered and constructed preference perspectives imply this is not necessarily the case there can be a large situational component to expressed preferences that add to the uncertainty of sampling error most non market valuation studies only collect data from one point in time so the degree of temporal variability cannot be tested test retest studies that provide data from two points in time generally find significant differences in preference structure and willingness to pay wtp in this study we test stability of wtp for beach erosion management using a fully ranked discrete choice experiment survey with not one but two retests over a six month period we find that stability does not improve with the additional repetition as the preference discovery hypothesis implies it might wtp confidence intervals overlap but the models are significantly different at each point in time even after allowing for variation in choice error either the survey did not facilitate sufficient preference discovery or preferences were reconstructed however respondents with high scores of self reported certainty in their choices in the first survey had significantly more stable wtp estimates

efficient estimation methods for closed ended contingent valuation surveys closed ended contingent valuation surveys can be very useful in the evaluation of nonmarket resources respondents merely state whether they would accept or reject a hypothetical threshold amount either as payment for giving up access to the resource or as a fee for its use the authors develop a maximum likelihood procedure which exploits the variation in the threshold values to allow direct and separate point estimates of regression like slope coefficients and error standard deviations without truncation bias their illustration uses data from a survey of recreational fisherman to examine factors which influence individuals willingness to pay copyright 1987 by mit press

traffic lights and food choice a choice experiment examining the relationship between nutritional food labels and price in this paper we investigate how consumers respond to the uk nutritional food label traffic light system tls employing a choice experiment ce we find that consumers appear to behave in a manner consistent with our expectations regarding the impact of the tls we identify a strong preference on the part of respondents to avoid a basket of goods containing a mix of foods with any red lights in addition we find that consumers have a hierarchy of importance in terms of perception of the various nutrients examined and there are clear behavioural differences associated with particular socio economic characteristics confirming early research on the use of nutrition labels overall our results indicate significant heterogeneity in the attitudes and responses of consumers to the tls nutritional food labels within and across socio economic strata

does accounting for preference heterogeneity improve the forecasting of a random utility model a case study abstract this paper examines the out of sample forecasting performance of several random utility models of recreation behavior the application is salmon fishing on lake michigan in 1996 and 1997 with the quality of fishing as measured by catch rates better in 1997 than in 1996 the models examined are a logit model two random parameters logit rpl models and a latent class logit lcl model results indicate that the rpl and lcl models forecast equally well and by at least one measure the logit model outperforms them both results also raise the possibility that recreational fishing decisions have a dynamic component

skew and attribute non attendance within the bayesian mixed logit model abstract we investigate non attendance to choice set attributes and the accommodation of preference heterogeneity within the mixed logit model we propose a generalisation of the mixed logit enabling the degree of skew of marginal utility distributions to be estimated the implementation is bayesian with the marginal likelihood used as an arbiter of model performance we find strong evidence of skew in the distributions of marginal utilities for most attributes models incorporating skew are preferred in all cases the irrelevance of an attribute to significant numbers of respondents is a possible cause of such skew we test alternative empirical accommodations of self reported attribute non attendance ana and continue to find strong evidence of skew in the distributions of marginal utilities even having accounted for ana we find that contrary to some recent findings respondents who report having ignored an attribute typically do indeed have a zero marginal utility for that attribute

households willingness to pay for water service attributes water consumption and disposal are often taken for granted as essential services with required levels of service quality yet little is known about how much consumers are willing to pay for specific service levels as customers in many countries face changing levels of water availability especially shortages linked possibly to climate change and limited catchment capacity the need to assess the value and hence benefit to society of varying service levels and prices in an effort to secure the provision of and disposal of water has risen on public agendas in an attempt to establish how much customers are willing to pay for specific levels of service we use a series of stated choice experiments and mixed logit models to establish the willingness to pay to avoid interruptions in water service and overflows of wastewater differentiated by the frequency timing and duration of these events the empirical evidence is an important input into the regulatory process for establishing service levels and tariffs as well as useful planning information for agencies charged with finding cost effective ways of delivering services at prices that customers deem to be value for money

preference heterogeneity in the structural estimation of efficient pigovian incentives for insecticide spraying to reduce malaria this paper bridges the theoretical and empirical literatures on the role of preference heterogeneity in characterizing externalities related to disease transmission we use a theoretical structure similar to locational sorting models which characterize equilibria in terms of marginal individuals who are indifferent between locations in our case the locations are binary consisting of whether or not to take a discrete preventative action individual heterogeneity arises in this structure due to variation in the costs and disutility associated with prevention we demonstrate application of this approach in the context of participation in insecticide based indoor residual spraying programs for malaria control in northern uganda we identify the parameters of our theoretical model using a stated preference choice experiment combined with estimates from published epidemiological studies the model implies that pigovian subsidies for participation in this context should decrease household malaria risk by 19 25 our approach can be applied to other bioeconomic externalities with spillovers from discrete preventative actions including agricultural pest management and the control of pest infestations and invasive species

purchasing power parity and real factors it is acknowledged that purchasing power parity ppp fails in empirical tests the position adopted is that real factors are an omitted variable from the ppp relationship and are the cause of divergences from ppp the real exchange rate as being determined by supply and demand shift factors as in stockman 1987 and neary 1988 is modelled we then empirically estimate a real exchange rate equation and use the fitted value as a generated regressor in tests of ppp it is demonstrated that when changes in the real exchange rate are incorporated into the ppp relationship ppp improves

random coefficient models for stated preference surveys abstract this paper combines the use of random coefficient discrete choice models that allow for correlated errors in the form of unobserved preference heterogeneity with an investigation of the reliability and usefulness of rankings data for the data we examine we find significant unobserved preference heterogeneity in the rankings which violates the underlying assumptions of the rank ordered logit model further directly modeling unobserved preference heterogeneity results in significant improvement in the precision of the parameter estimates and in estimated willingness to pay wtp the reliability and usefulness of rankings data should be re examined with econometric models not subject to the independence of irrelevant alternatives iia

using a choice experiment to account for preference heterogeneity in wetland attributes the case of cheimaditida wetland in greece abstract this paper aims to assist policy makers in formulating efficient and sustainable wetland management policies in accordance with the ramsar convention and the european union water framework directive 2000 60 ec by providing results of a valuation study on the cheimaditida wetland in greece a choice experiment is employed to estimate the values of changes in several ecological social and economic functions that cheimaditida wetland provides to the greek public in addition to the conditional logit model a random parameter logit model a random parameter logit model with interactions and a latent class model are estimated to account for heterogeneity in the preferences of the public for the various functions of the wetland the results reveal that there is considerable preference heterogeneity across the public and on average they derive positive and significant values from sustainable management of this wetland the estimated economic benefits of sustainable wetland management are weighed against the costs of alternative wetland management scenarios results of this cost benefit analysis can aid in the design of socially optimal policies for sustainable management of the cheimaditida wetland with possible implications for other similar wetlands in greece and the rest of europe

consumer willingness to pay for traditional food products reflecting the growing interest from both consumers and policymakers and building on recent developments in willingness to pay wtp methodologies we evaluate consumer preferences for an archetypal traditional food product specifically we draw on stated preference data from a discrete choice experiment considering the traditional hungarian mangalitza salami a wtp space specification of the generalized multinomial logit model is employed which accounts for not only heterogeneity in preferences but also differences in the scale of the idiosyncratic error term results indicate that traditional food products can command a substantial premium albeit contingent on effective quality certification authentic product composition and effective choice of retail outlet promising consumer segments and policy implications are identified

the value of purchase history data in target marketing an important aspect of marketing practice is the targeting of consumer segments for differential promotional activity the premise of this activity is that there exist distinct segments of homogeneous consumers who can be identified by readily available demographic information the increased availability of individual consumer panel data open the possibility of direct targeting of individual households the goal of this paper is to assess the information content of various information sets available for direct marketing purposes information on the consumer is obtained from the current and past purchase history as well as demographic characteristics we consider the situation in which the marketer may have access to a reasonably long purchase history which includes both the products purchased and information on the causal environment short of this complete purchase history we also consider more limited information sets which consist of only the current purchase occasion or only information on past product choice without causal variables proper evaluation of this information requires a flexible model of heterogeneity which can accommodate observable and unobservable heterogeneity as well as produce household level inferences for targeting purposes we develop new econometric methods to implement a random coefficient choice model in which the heterogeneity distribution is related to observable demographics we couple this approach to modeling heterogeneity with a target couponing problem in which coupons are customized to specific households on the basis of various information sets the couponing problem allows us to place a monetary value on the information sets our results indicate there exists a tremendous potential for improving the profitability of direct marketing efforts by more fully utilizing household purchase histories even rather short purchase histories can produce a net gain in revenue from target couponing which is 2 5 times the gain from blanket couponing the most popular current electronic couponing trigger strategy uses only one observation to customize the delivery of coupons surprisingly even the information contained in observing one purchase occasion boasts net couponing revenue by 50 more than that which would be gained by the blanket strategy this result coupled with increased competitive pressures will force targeted marketing strategies to become much more prevalent in the future than they are today

heterogeneous preferences regarding global climate change we examine the structure of preferences for mitigating impacts of global climate change that will not occur during the lifetimes of most who are alive today because no market data exist for such distant markets a statedpreference approach is used the analysis is based on the random parameters logit model and the results indicate substantial heterogeneity in respondent preferences that mean willingness to pay is a significant and increasing function of the scope of the impact and provocatively that respondents have the same preferences over the two very different time horizons that we consider e examine the structure of preferences for mitigating impacts of global climate change that will not occur during the lifetimes of most who are alive today studies using current market data have estimated the potential costs of climate change on agriculture mendelsohn nordhaus shaw 1994 and on other aspects of measured production nordhaus 1994 but market data can not reveal the willingness of those currently alive to pay for measures to mitigate impacts that may not happen for 100 years or more there is serious public discussion involving diplomats at the highest levels about measures to mitigate emissions that would cost the united states alone 100 to 200 billion dollars annually therefore estimating the willingness of those currently alive to pay for mitigation measures is not a fanciful exercise but rather a crucial effort to determine how much mitigation should be undertaken it is the preferences of those alive today regarding acceptable levels of climate impacts and not the unknowable preferences of those who do not yet exist that will ultimately determine how much mitigation we pursue in the next quarter century as this question cannot be answered with market data we use the stated preference sp approach and elicit preferences for preventing climate change induced impacts a host of climate change impacts have been enumerated this study focuses on one type of impact that may be important but has received little attention from economists scientists have predicted that widespread ecosystem shifts may accompany changes in climate vemap 1995 ecosys tem shifts are likely to evolve slowly indicating that lost use values are likely to be small for those alive today yet the public may still be willing and asked to pay for mitigation measures that are designed to slow the transformation of ecosystems the current debate over climate change demon strates two things the first is that some people do care about long term changes that will never affect them or perhaps even their children the second is that preferences regarding the impacts of climate change are very heterogeneous as other members of the public appear much less concerned long term horizons combined with heterogeneous prefer ences makes ecosystem shifts a useful place to begin analyzing preferences for mitigating climate change im pacts a stated preference survey was designed that asked respondents to choose their most preferred program to reduce ecological impacts from a set menu of five or six different programs the programs varied in terms of costs the degree of ecosystem change and in the mitigation method four different menus provided to each respondent yielded four distinct valuation responses section ii de scribes the random parameters logit model for repeated choices that allows for a flexible correlation structure based on heterogeneous preferences the ecosystem change and the stated preference survey are discussed in section iii in section iv we estimate the random parameters model and estimate the willingness to pay to prevent various levels of ecosystem change section v concludes with a discussion of how the scope of the impact preference heterogeneity and the time horizon affect willingness to pay

recreation demand models with taste differences over people we estimate random parameter logit models of anglers choice of fishing site the models generalize logit by allowing coefficients to vary randomly over anglers rather than being fixed the models do not exhibit the restrictive independence from irrelevant alternatives property of logit and can represent any substitution pattern estimation explicitly accounts for the fact that the variation in coefficients over anglers induces correlation in unobserved utility over trips by the same angler willingness to pay for improved fish stock and the value to anglers of specific sites are calculated from the models and compared with the estimates obtained from a standard logit model

how wrong can you be implications of incorrect utility function specification for welfare measurement in choice experiments despite the vital role of the utility function in welfare measurement the implications of working with incorrect utility specifications have been largely neglected in the choice experiments literature this paper addresses the importance of specification with a special emphasis on the effects of mistaken assumptions about the marginal utility of income monte carlo experiments were conducted using different functional forms of utility to generate simulated choices multi nomial logit and mixed logit models were then estimated on these choices under correct and incorrect assumptions about the true underlying utility function estimated willingness to pay measures from these choice modeling results are then compared with the equivalent measures directly calculated from the true utility specifications results show that for the parameter values and functional forms considered a continuous quadratic or a discrete linear attribute specification is a good option regardless of the true effects the attribute has on utility we also find that mistaken assumptions about preferences over costs magnify attribute mis specification effects

choice experiments site similarity and benefits transfer choice experiments are designed to account for variations in environmental resources and site characteristics as well as potential implications of these variations for willingness to pay as a result choice experiment results may be well suited for benefits transfer it is unclear however whether the flexibility of choice experiments renders the similarity of study and transfer sites less critical for transfer validity drawing from identical choice experiments conducted in different rhode island communities this model assesses the extent to which error in function based benefits transfer is related to the similarity of communities across a variety of observable dimensions results suggest that site similarity at least across some dimensions influences the validity of choice experiment benefits transfers however the use of some measures of similarity as indicators of transfer error may provide misleading results

monetary and fiscal policy in the great moderation and the great recession in this paper we argue for a new approach to monetary and fiscal policy during the great moderation the inflation targeting regime worked well central banks used the interest rate to stabilize inflation and subject to inflation being controlled stabilized the level of demand fiscal policy exerted discipline over the public sector deficits thereby indirectly managing the level of public debt such fiscal housekeeping worked well because the monetary authorities were stabilizing the economy but once private sector deleveraging led to the great recession and interest rates hit their zero bound the outcome could no longer be managed by monetary policy recovery depended on the automatic stabilizers output and tax revenues have fallen public debt has been created and assets have been created which a deleveraging private sector wishes to hold but the effect has been very gradual recovery would have been faster if fiscal policy had been responsible for the restoration of full employment in an environment which tolerated the necessary rises in public debt conversely policies of austerity designed to reduce public debt have slowed the recovery growth will not be resumed until the private sector begins to invest strongly again creating the financial assets which the private sector wishes to hold thereby enabling public debt to be retired this has not yet happened because the private sector correctly does not believe that macroeconomic policy is capable of sustaining a strong recovery

preferences of scotch malt whisky consumers for changes in pesticide use and origin of barley abstract in a case study related to scotch malt whisky production this study analyses consumers perceptions and preferences regarding two aspects that have emerged in the debate on sustainable production and consumption and on environmentally responsible food choice namely i the use of pesticides in agriculture and ii the provenance of food ingredients we carried out a choice experiment to investigate preferences and estimate willingness to pay of scotch malt whisky consumers for pesticide use restrictions and the potential impact on the production of one of its essential ingredients barley using latent class models we find that about half of the respondents are non demanders with respect to both attributes and only a third of the sample population are willing to pay for further pesticide restrictions demand for more environmentally responsible production of scotch malt whisky is therefore limited indicating that in the case of scotch malt whisky consumers are not likely to be key to driving sustainable production with respect to barley provenance being able to claim a 100 scottish product could be a plausible commercial option for some producers to pursue in a competitive market methodologically the scale adjusted latent class model proved to be successful in uncovering preference heterogeneity and its sources in including non demanders in the analysis and in accounting for differences in scale amongst respondents

fiscal inconsistencies and high inflation abstract this paper presents a simple model of steady state inflationary financing the discrepancy between the target level of spending and a fixed taxing capacity indicates the degree of fiscal pressures this variable need not be monotonically related to the measured deficit since actual expenditures are endogenous large fiscal inconsistencies generate unique steady states located on the bad side of the inflation tax laffer curve there high inflation may coexist with low observed deficits and the revenue constraint results in repressed spending such situations correspond qualitatively with the loss of control over fiscal policies typical of high inflation economies

what you don t know might hurt you some unresolved issues in the design and analysis of discrete choice experiments the papers and comments in this issue focus on four broad areas related to understanding and modeling choices 1 the use of laboratory experiments to improve valuation methods 2 the design of stated preference choice set and choice occasions 3 latent class models as means of identifying and accommodating preference heterogeneity and 4 accommodating uncertainty about the true model modeling ranking and rating tasks and pooling data sources in what follows i offer some comments on each area and briefly discuss several unresolved issues associated with each area closing with some comments about future research opportunities