A Comparison of Bayesian and Sampling Theory Inferences in a Probit Model

HE PROBIT MODEL IS A POPULAR DEVICE for explaining binary choice decisions in econometrics. It has been used to describe choices such as labor force participation, travel mode, home ownership, and type of education. These and many more examples can be found in papers by Amemiya (1981) and Maddala (1983). Given the contribution of economics towards explaining such choices, and given the nature of data that are collected, prior information on the relationship between a choice probability and several explanatory variables frequently exists. Bayesian inference is a convenient vehicle for including such prior information. Given the increasing popularity of Bayesian inference it is useful to ask whether inferences from a probit model are sensitive to a choice between Bayesian and sampling theory techniques. Of interest is the sensitivity of inference on coefficients, probabilities, and elasticities. We consider these issues in a model designed to explain choice between fixed and variable interest rate mortgages. Two Bayesian priors are employed: a uniform prior on the coefficients, designed to be noninformative for the coefficients, and an inequality restricted prior on the signs of the coefficients. We often know, a priori, whether increasing the value of a particular explanatory variable will have a positive or negative effect on a choice probability. This knowledge can be captured by using a prior probability density function (pdf) that is truncated to be positive or negative. Thus, three sets of results are compared:those from maximum likelihood (ML) estimation, those from Bayesian estimation with an unrestricted uniform prior on the coefficients, and those from Bayesian estimation with a uniform prior truncated to accommodate inequality restrictions on the coefficients.

Bioeconomic analysis of aquaculture's impact on wild stocks and biodiversity

Anderson theorizes that development of the aquaculture of a species of fish (also captured in an open-access fishery) favours the conservation of its wild stocks, if competitive market conditions prevail. However, this theory is shown to be subject to significant limitations. While this is less so within his model, it is particularly so in an extended one outlined here. The extended model allows for the possibility that aquaculture development can impact negatively on wild stocks thereby shifting the supply curve of the capture fishery, or raise the demand for the fish species subject both to aquaculture and capture. Such development can threaten wild stocks and their biodiversity. While aquaculture development could in principle have no impact on the biodiversity of wild stocks or even raise aquatic biodiversity overall, its impact in the long-term probably will be one of reducing aquatic diversity both in the wild and overall.

Children and economic development: Family size, gender preferences and human capital formation - theory and Indian cases

In the light of Gary Becker's economic theory of the family, considers how economic cost and benefit factors can influence the size of families that parents decide to have. Some support for the importance of such factors is found from results of structured interviews with wives in Kondh-dominated villages in western Orissa. These results are at variance with the hypothesis of Malthus about population growth. Factors that may alter the optimal family size as development proceeds are discussed. It is found in our sampling that, on the whole, there is a preference for daughters rather than sons although this is not as strong in the Kondh-dominated villages as in poor villages in the Santal tribal belt of West Bengal. While in the Kondh-dominated villages some discrimination in access to education in favour of boys compared to girls is present, little such or no such discrimination occurs in relation to access to food and medical attention. In the villages surveyed in the West Bengal Santal tribal belt, discrimination in favour of boys is more pronounced than in the Kondh-dominated area in Orissa. While economic considerations help to explain gender discrimination between boys and girls, we find that social and cultural factors also play a major role. Parents in a similar economic situation seem to display substantially different patterns of gender discrimination between children depending on their social and cultural content. It seems that the extent to which economic theories of the family explain family preferences and behaviour depend significantly on the social and cultural context in which they are to be applied.

Ecotourism/Wildlife-based tourism as contributor to nature conservation with reference to Vanni, Sri Lanka

After discussing definitions of ecotourism, outlines possible economic and conservational benefits from developing ecotourism or wildlife-based tourism. Identifies possible economic benefits for local communities but also outlines possible economic costs to such communities. Observations are made on the potential of developing ecotourism in the Giant’s Tank/Mannar area. A sufficient market does not always exist for wildlife-based tourism to make it economically viable. Therefore, market analysis should be undertaken before promoting the development of wildlife-based tourism in a locality. A checklist is provided to give some guidance in market appraisal. It is observed that even non-consumptive wildlife-based tourism can have adverse environmental consequences and these are listed. Care is needed to avoid these negative consequences and to ensure that local communities do in fact obtain adequate economic benefits from the development of wildlife-based tourism.

Wildlife damage, insurance/compensation for farmers and conservation: Sri Lankan elephants as a case

The interference with agriculture has been recognised as the main cause for the current conflict between farmers and wild elephants in Sri Lanka, as elsewhere in the Asian elephant range. Thus compensating farmers for the damages caused by elephants is essential, if this endangered species is to survive in the long run. This paper explores the practicality of establishing an improved publicly funded insurance/compensation scheme to recompense farmers for the elephant damages. It does so by analysing results from two contingent valuation surveys undertaken in Sri Lanka. We find that possible public support of farmers plus urban dwellers significantly exceeds the financial requirement of the insurance scheme proposed in this study for perpetuity. The article also shows that it is often inappropriate from an economic viewpoint to analyse crop insurance as if it only involves the insurance of a private good because important positive externalities can arise from ‘crop’ damages by wildlife, e.g. elephants. The use of agricultural land by some species is essential for their long-term survival and this is often positively valued by the community as a whole.

Attitudes to entry fees to National Parks: Results and policy implications from a Queensland case study

Examines visitor attitudes and whether visitors are willing to pay to enter Lamington National Park and under what circumstances they would do so. First a sample of visitors is asked a general (normative) question as to whether visitors should pay to visit Lamington National Park and in another question (positive) they are asked whether they would be more willing to pay if the money collected would be invested in the park to improve visitor facilities and for conservation work. The results show that visitors are more willing to accept the ‘user-pays’ principle if the money will be used for the benefit of the national park and its visitors. It was found that foreigners are more in support for a ‘user-pay’ fee than Australians, and among Australians, those visitors from Queensland are the least willing to accept the idea of a user-pay fee to enter the park. The results indicate that if visitors can be shown the benefits (both for visitors and for conservation) of charging an entry fee, then visitors are more likely to support such a concept than when they are unaware of the benefits of a user-fee. The study shows that on average foreigners are willing to pay more than Australians. Finally, the regression results identify significant factors influencing visitors’ attitudes and suggested amounts to visit the national park.