the role of reference prices in experimental auctions abstract we examine the role of reference prices field prices in willingness to pay studies involving experimental auctions using a 2nd price vickrey auction we find that provision of reference prices increases bid values

functional ingredients and food choice results from a dual mode study employing means end chain analysis and a choice experiment abstract in this paper we present the results of a choice experiment ce conducted to examine how the inclusion of a functional ingredient to increase the quantity and effectiveness of fibre affects consumer attitudes towards bread an novel feature of the design of our ce was that it was informed by a means end chain mec to reveal key attributes to be included in the ce in addition we included the dutch eating behaviour questionnaire debq to collect information on all participants underlying eating behaviours we find that bread type is a major factor in determining choice and that the inclusion of a functional ingredient yielded relatively small measures of value we also find that there are differences in willingness to pay wtp between respondent segments and that segment membership is explained by the debq information finally we find that respondents have a stronger preference for a simple health statement compared to or in addition to the implied benefits that result from consuming a functional food product these findings are important in informing both pricing and promotional messages for a functional bread product

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

employment impacts of eu biofuels policy combining bottom up technology information and sectoral market simulations in an input output framework this paper analyses the employment consequences of policies aimed to support biofuels in the european union the promotion of biofuel use has been advocated as a means to promote the sustainable use of natural resources and to reduce greenhouse gas emissions originating from transport activities on the one hand and to reduce dependence on imported oil and thereby increase security of the european energy supply on the other hand the employment impacts of increasing biofuels shares are calculated by taking into account a set of elements comprising the demand for capital goods required to produce biofuels the additional demand for agricultural feedstock higher fuel prices or reduced household budget in the case of price subsidisation price effects ensuing from a hypothetical world oil price reduction linked to substitution in the eu market and price impacts on agro food commodities the calculations refer to scenarios for the year 2020 targets as set out by the recent renewable energy roadmap employment effects are assessed in an input output framework taking into account bottom up technology information to specify biofuels activities and linked to partial equilibrium models for the agricultural and energy sectors the simulations suggest that biofuels targets on the order of 10 15 could be achieved without adverse net employment effects

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

value of parsimonious nutritional information in a framed field experiment abstract this study investigates consumers beliefs about the tastiness and healthiness of 173 food items in a framed field experiment designed to mirror a grocery shopping environment using data collected from 129 food shoppers in grenoble france demand models are estimated to determine how product choice is affected by price taste and perceived healthiness and how choices change with the provision of objective health information unlike previous studies focusing on relatively complex nutrition labels we elicit and convey health information using simple nutritional indices meant to lower search and cognitive processing costs the results indicate that consumers are willing to pay for tastier foods and for healthier foods particularly if the consumers have objective information as opposed to perceived subjective information on nutrient content the estimates suggest that the value of the type of nutritional information provided in the experiment is 0 98 per day the figure refers to the daily welfare benefits that arise from being able to make a set of choices that better reflect people s preferences by receiving the nutrient index information on all 173 food items versus not having such information

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

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

tastes skills and local public goods abstract this paper analyzes optimal club configurations in an economy where different types of labor are complementary in the production of private goods extending the work of berglas journal of public economics 6 409 423 1976 the analysis shows that when labor types are nonessential in production a homogeneous club configuration may be optimal despite the presence of labor complementarity the assumption that inputs are essential precluded this outcome in berglas model it is shown that homogeneous clubs are optimal when complementarity is weak or when preferences are substantially different

heterogeneity within communities a stochastic model with tenure choice standard explanations for the income heterogeneity within neighborhoods rely on differences of preferences across households and heterogeneity of the housing stock we propose an alternative and complementary explanation we construct a stochastic equilibrium sorting model where 1 income is the sole dimension of household heterogeneity 2 households form state contingent housing location plans that may involve moves over their lifetimes 3 households choose whether to own or rent depending on the housing expenditure risk associated with each tenure mode and 4 there is a probability that newcomer households move in and compete for homes with native households income mixing within neighborhood arises for two reasons first allowing natives to form state contingent housing location plans breaks the indivisibility of housing consumption implicit in the literature where households choose their location once and for all second natives can insure themselves against rent fluctuations by buying their home prior to the realization of the population shock newcomers cannot as a result poorer natives stay in the more desirable communities and only richer newcomers move in these communities evidence from u s metropolitan areas supports the effects predicted by the model

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

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

on price taking equilibria in club economies with nonanonymous crowding abstract competitive equilibrium in a coalition production economy or a club economy typically does not exist when there is free entry for two reasons first there may be an integer problem as is familiar from club theory with anonymous crowding second optimal groups may have different compositions from the population and then even if there is no integer problem it may be impossible to partition the population into optimal groups i define a notion of approximate equilibrium and show that such an equilibrium always exists in a sufficiently large economy i focus on the optimal size of the economy rather than of clubs

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

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

effects and value of verifiable information in a controversial market evidence from lab auctions of genetically modified food food products containing genetically modified gm ingredients have entered the market over the past decade the biotech industry and environmental groups have disseminated conflicting private information about gm foods this paper develops a unique methodology for valuing independent third party information in such a setting and applies this method to consumers willingness to pay for food products that might be gm data are collected from real consumers in an auction market setting with randomized information and labeling treatments the average value of third party information per lab participant is small but the public good value across u s consumers is shown to be quite large jel c91 d12 d82

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

health information and diet choices results from a cheese experiment abstract this study reports results from a choice experiment on semi hard cheese from norway about half of the 408 participants were exposed to diet related health information before performing either a choice or a ranking task while a control group did not receive such information the effects of health information on marginal willingness to pay for low saturated fat low fat and organic cheese are analyzed using rank ordered mixed logit models cheese preferences are clearly affected by exposure to health information on average the health information group is willing to pay a price premium of 27 2 nok 24 5 per kg for low saturated fat cheese and 14 4 nok 13 0 per kg for low fat cheese this is respectively 1 73 and 2 89 times more than corresponding price premiums in the control group non college medium high income age 50 70 and female participants are more clearly affected by health information than college low income age 30 49 and male participants subjective statements on diet health knowledge and awareness are used to discuss these findings our results suggest that provision of health information is likely to reduce educational differences in diet health knowledge and thus dietary behavior low income participants seem to be constrained by high food prices but not by lack of knowledge or awareness finally due to lack of diet health awareness reaching out to young people and particularly males through health information policies seems difficult

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

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

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

the impact of mandatory trans fat labeling on product mix and consumer choice a longitudinal analysis of the u s market for margarine and spreads abstract the impact of changes in food labeling policy on food consumption depends on how market participants both firms and consumers react to the changes across all products in the market we investigate how both responded to the u s food and drug administration s 2006 rule mandating that the quantity of trans fat in food products be separately labeled on the mandatory nutrition facts panel across an entire differentiated product category using a longitudinal data set tracking both product offerings and consumer purchases in the market for margarine and spreads for over a decade we analyze how product mix and consumer purchase behaviors were influenced by the new regulatory requirement we find that the number of products bearing voluntary trans fat free labels increased after the labeling regulation was implemented however a large number of the newly introduced products exited the market within five years as a result the fda s 2006 rule had a stronger short run than long run effect on product offerings even after the introduction of additional trans fat free labeled products such products remained only a small percentage of margarine and spreads product offerings increasing from a pre regulation level of 2 3 of the market to a peak of 6 5 in 2007 before dropping to 3 1 by 2011 in addition to firm response we examine demand side reactions to the 2006 rule and find that consumers significantly increased their expenditures on trans fat free labeled products soon after the labeling changes were implemented increasing from about 1 2 of the market in 2001 to a peak of 5 9 in 2007 before returning to 1 8 in 2011 we further explore variations in responses across different demographic characteristics although long run effects are small the market for trans fat free labeled margarine and spreads settled into a new equilibrium with a somewhat higher level of products in the market than prior to the 2006 rule taking effect and a somewhat higher share of expenditures in the category overall our category wide analysis of both firm and consumer behavior indicates that the effects of the labeling policy change were smaller in the longer run in this market than would be indicated by an analysis of only new product introductions in response to the policy change

visual attention and attribute attendance in multi attribute choice experiments summary decision strategies in multi attribute choice experiments are investigated using eye tracking the visual attention towards and attendance of attributes is examined stated attendance is found to diverge substantively from visual attendance of attributes however stated and visual attendance are shown to be informative non overlapping sources of information about respondent utility functions when incorporated into model estimation eye tracking also reveals systematic nonattendance of attributes only by a minority of respondents most respondents visually attend most attributes most of the time we find no compelling evidence that the level of attention is related to respondent certainty or that higher or lower value attributes receive more or less attention copyright 2014 john wiley sons ltd

equivalence of the core and competitive equilibrium in a tiebout economy with crowding types abstract we propose a new model of a local public goods economy with differentiated crowding the new feature is that taste and crowding characteristics of agents are distinguished from one another we prove that if the economy satisfies strict small group effectiveness then the core is equivalent to the set of tiebout equilibrium outcomes equilibrium prices are defined to depend solely on crowding characteristics this implies that only publicly observable information and not private information such as preferences is needed to induce agents to sort themselves into efficient jurisdictions thus our model allows us to satisfy bewley s 6 anonymity requirement on taxes in his well known criticism of the tiebout hypothesis

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

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

public multi criteria assessment for societal concerns and gradual labelling we present a multicriteria product assessment framework that can be used to rank existing products against hypothetical product scenarios products are ranked for environmental impact healthfulness naturalness and fairness assessment criteria and relative importance weights are sourced from the public the framework has been demonstrated for fresh tomato production scenarios results are valid because they correspond to public concerns gradient to reward small production improvements and relative to available product alternatives their interpretation can be normative with reference to existing production averages without agreement on absolute acceptability thresholds data improvement agrees with rational stakeholder behaviour results identify technological applications of higher and lower public acceptability potential for production and research agenda optimisation other producer uses include labelling and brand name protection civil society uses include the critical assessment of production public uses include labelling in consumer driven markets and smooth production sector re structuring by incentivizing a race to the top for production externalities of public concern like the environmental sustainability or the fairness of production

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

economic growth sustainable development and food consumption evidence across different income groups of countries abstract considering that high population and income growths will lead the coming decades an increase in global food demand is expected livestock products such as meat are closely related to this trend but also associated with impacts on the environment and public health from land and water depletion to greenhouse gases emissions and higher risks of non communicable diseases this trend raises doubts about the sustainability of the food industry and thus a solution is needed for the problem how to feed the world population without compromising present and future generations the literature suggests that meat consumption should be reduced for the sake of the environment and global population however without considering the effects that such reduction would have on the economy inspired by these facts this paper empirically analyses the interactions between food consumption economic growth and sustainable development measured by the index of sustainable economic welfare more specifically the paper assesses the effect that food consumption has on the economy the econometric analysis applies the autoregressive distributed lag model for 77 countries further distinguished by their income group from 1995 to 2013 the findings support that meat consumption has different impacts on economic growth and sustainable development considering different income groups however there is an evident dilemma between economic growth and sustainable development since meat consumption has contradictory effects on each thus it is crucial to understand how to promote sustainability i e reducing the environmental externalities and chronic health diseases without compromising economic growth

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

sorting by foot travel for local public goods and equilibrium stratification we re examine tiebout s hypothesis of endogenous sorting in a competitive spatial equilibrium framework by considering both income and preference heterogeneity and by allowing agents to decide endogenously the number of visits to a travel for local public good the equilibrium configuration may be completely segregated incompletely segregated or completely integrated depending on relative market rents and income preference local tax parameters a segregated equilibrium may feature endogenous sorting purely by income or by both income and preferences while the rich need not be closer to the local public facility site multiple equilibria may arise when the equilibrium configuration is incompletely segregated jel classification d50 h41 classification par deplacement biens publics locaux accessibles par deplacement et stratification d equilibre les auteurs reexaminent l hypothese de tiebout de classification endogene dans un cadre d equilibre spatial concurrentiel en tenant compte a la fois de l heterogeneite des revenus et des preferences ainsi qu en permettant aux agents de decider de maniere endogene du nombre de visites pour se procurer un bien public local par deplacement il peut s ensuivre des equilibres de segregation complete de segregation incomplete ou d integration complete selon les rentes relatives et les parametres de revenus de preferences ou de fiscalite locale un equilibre de segregation peut entrainer une classification endogene sur la base seulement des revenus ou sur la base des revenus et des preferences alors que les riches n ont pas besoin d etre plus proches du site du bien public local des equilibres multiples peuvent surgir quand la configuration d equilibre en est une de segregation incomplete

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

measuring the welfare effects of nutrition information cost benefit analysis justifies regulations altering the amount of health related information presented to consumers the current method of benefit analysis the cost of avoided illness is limited it assumes the benefits of health related information are adequately represented by changes in illnesses the manuscript develops a benefit estimation method to measure the welfare impacts of providing nutrient information nutrient labeling significantly affects purchase behaviour but may not lead to increased consumption of health foods nutrient labeling may increase welfare without any change in health risk thus the cost of avoided illness approach can underestimate the social benefits of providing nutrient information copyright 2001 oxford university press

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

the effects of male and female labor supply on commodity demands we examine the effects of male and female labor supply on household demands and present a simple and robust test for the separability of commodity demands from labor supply using data on individual households from six years of the uk fes we estimate a demand system for seven goods which includes hours and participation dummies as conditioning variables allowance is made for the possible endogeneity of these conditioning labor supply variables we find that separability is rejected furthermore we present evidence that ignoring the effects of labor supply leads to bias in the parameter estimates

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

decentralization in replicated club economies with multiple private goods abstract we show that exhaustion of blocking opportunities is a sufficient condition such that every allocation in the core of a replicated club economy can be decentralized as a competitive equilibrium and that a related condition efficient scale is necessary and under an assumption on endowments sufficient such that competitive equilibrium exists and the core is nonempty these results do not require the euclidean structure and monotonicity assumed in lindahl equilibrium do not require convexity of preferences or costs and do not require the strong assumption that private goods are essential journal of economic literature classification numbers d46 d50 d61 h40

opposites attract the effect of the federal income tax code on community composition abstract if houses in two homogeneous but dissimilar communities are reorganized as a single heterogeneous community property tax payments are shifted from owners of small houses to owners of large houses we consider three aspects of the federal income tax code which causes this shifting to raise aggregate property values in the heterogeneous community first the property tax is deductible and the tax rate structure is progressive second some families do not itemize third the restriction on saving in tax deferring assets suggests the use of different interest rates to capitalize future property taxes because of these aspects heterogeneous communities are established provided the different family types desire similar levels of public service

getting consumers to eat more whole grains the role of policy information and food manufacturers the 2005 dietary guidelines were unique because they offered quantitative recommendations for consumption of whole grains this case study examines the hypothesis that the changed recommendations were responsible for the recent increase in retail sales and consumption of whole grain food products we find that release of the dietary guidelines and related media attention did increase availability and sales of whole grain foods a large impact on consumption occurred through reformulation of existing products induced by competition among food suppliers this study reveals the key role product reformulation plays in inter firm competition and in realization of dietary changes recommended by public

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

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

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

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

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

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

a unified approach to incorporating demographic or other effects into demand systems a general method of introducing demographic effects into any demand system using modifying functions is described which permits complicated interactions of demographic variables with prices and expeditures theorems give properties the modifying functions must have to ensure integrability of the resulting system demand equations of the new system are given explicitly as functions of the original demand equations and the modifying functions the procedure is interpreted as altering a households technology and is shown to encompass adult equivalent scales and related methods examples of modifying functions are derived and applications of the technique to uses other than demographic variation are considered excerpt

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

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

food choice health information and functional ingredients an experimental auction employing bread abstract in this paper we present the results of an experimental auction conducted to examine the influence of health and nutritional information on food choice and in particular estimate consumer willingness to pay wtp for bread that contains functional ingredients employing a sandwich we find that consumers are wtp more for a whole grain and whole grain granary bread sandwich than other bread types including white bread that contains a functional ingredient we also find that consumers react positively to the provision of nutritional and health benefit information but that this effect occurs regardless of whether we supply specific or non specific health benefit information we discuss information provision and health policy implications that emerge from our analysis for bread products in the sandwich market

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

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

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

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

price and expenditure elasticities of residential energy demand during urbanization an empirical analysis based on the household level survey data in china abstract urbanization one of the most obvious characteristics of economic growth in china has an apparent lock in effect on residential energy consumption pattern it is expected that residential sector would become a major force that drives china s energy consumption after urbanization process we estimate price and expenditure elasticities of residential energy demand using data from china s residential energy consumption survey crecs that covers households at different income levels and from different regional and social groups empirical results from the almost ideal demand system model are in accordance with the basic expectations the demands for electricity natural gas and transport fuels are inelastic in the residential sector due to the unreasonable pricing mechanism we further investigate the sensitivities of different income groups to prices of the three types of energy policy simulations indicate that rationalizing energy pricing mechanism is an important guarantee for energy sustainable development during urbanization finally we put forward suggestions on energy pricing reform in the residential sector based on characteristics of china s undergoing urbanization process and the current energy consumption situations

tiebout economies with differential genetic types and endogenously chosen crowding characteristics abstract we consider a tiebout economy with differential crowding and public projects in which agents are distinguished by their tastes and genetic endowments agents choose which crowding characteristic for example a skill they wish to express and this affects their value to other members of their jurisdiction club firm etc an agent s choice is influenced both by his genetic endowment which affects his cost of acquiring crowding characteristics and by his preferences over which crowding characteristic he expresses we show that if small groups are strictly effective the core is equivalent to the set of anonymous competitive equilibrium outcomes but that the core generally contains taste homogeneous jurisdictions journal of economic literature classification numbers h41 h72

should students be used as subjects in experimental auctions abstract we examine the bidding behavior of students and non students in experimental auctions by comparing their willingness to pay wtp values for a good our results suggest that there is no significant difference between the wtp bids of the two groups

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

food product composition consumer health and public policy introduction and overview of special section as efforts to improve diets in high income countries intensify attention has turned to how policies may influence diet composition the case studies in this special issue contribute to our understanding of how two main types of policies have influenced food product composition and dietary outcomes 1 policies affecting food manufacturers input costs and 2 information policy affecting competition research on the first type of policy is relatively new but suggests that us commodity policies would not be good policy instruments to influence diets except through the long run impacts of agricultural research research on the impacts of information policy continues to demonstrate that it can spur food industry competition to introduce healthier products but may not result in healthier diets international comparisons show where the us experience may have relevance for other high income countries

quadratic engel curves and consumer demand this paper presents a model of consumer demand that is consistent with the observed expenditure patterns of individual consumers in a long time series of expenditure surveys and is also able to provide a detailed welfare analysis of shifts in relative prices a nonparametric analysis of consumer expenditure patterns suggests that engel curves require quadratic terms in the logarithm of expenditure while popular models of demand such as the translog or the almost ideal demand systems do allow flexible price responses within a theoretically coherent structure they have expenditure share engel curves that are linear in the logarithm of total expenditure we derive the complete class of integrable quadratic logarithmic expenditure share systems a specification from this class is estimated on a large pooled data set of u k households models that fail to account for engel curvature are found ro generate important distortions in the patterns of welfare losses associated with a tax increase

environmental defensive expenditures and households behaviour in italy the paper explores the role of environmental defensive expenditures in the consumption behaviour of italian households environmental defensive expenditures are not borne to increase households welfare but to prevent or avoid the effects of a worsening environmental quality the literature on environmental accounting argues that economic growth in industrialized countries is accompanied by an increasing load of defensive activities that may lead to a reorientation of consumption behaviour in this work this hypothesis is tested using annual data on mean consumption expenditures of italian households from 1985 to 1996 a complete system of demand is estimated and short run price elasticities of demand for defensive expenditures are calculated the complete system of demand functions is specified using the quadratic almost ideal demand system proposed by banks blundell and lewbel results show that there is very low substitution between the demand for the six aggregate goods in which total expenditure is

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