Valuation of reduced eutrophication in the Gulf of Finland : Choice experiment with attention to heterogeneous and discontinuous preferences and respondent uncertainty

Eutrophication of the Baltic Sea is a serious problem. This thesis estimates the benefit to Finns from reduced eutrophication in the Gulf of Finland, the most eutrophied part of the Baltic Sea, by applying the choice experiment method, which belongs to the family of stated preference methods. Because stated preference methods have been subject to criticism, e.g., due to their hypothetical survey context, this thesis contributes to the discussion by studying two anomalies that may lead to biased welfare estimates: respondent uncertainty and preference discontinuity. The former refers to the difficulty of stating one s preferences for an environmental good in a hypothetical context. The latter implies a departure from the continuity assumption of conventional consumer theory, which forms the basis for the method and the analysis. In the three essays of the thesis, discrete choice data are analyzed with the multinomial logit and mixed logit models. On average, Finns are willing to contribute to the water quality improvement. The probability for willingness increases with residential or recreational contact with the gulf, higher than average income, younger than average age, and the absence of dependent children in the household. On average, for Finns the relatively most important characteristic of water quality is water clarity followed by the desire for fewer occurrences of blue-green algae. For future nutrient reduction scenarios, the annual mean household willingness to pay estimates range from 271 to 448 and the aggregate welfare estimates for Finns range from 28 billion to 54 billion euros, depending on the model and the intensity of the reduction. Out of the respondents (N=726), 72.1% state in a follow-up question that they are either Certain or Quite certain about their answer when choosing the preferred alternative in the experiment. Based on the analysis of other follow-up questions and another sample (N=307), 10.4% of the respondents are identified as potentially having discontinuous preferences. In relation to both anomalies, the respondent- and questionnaire-specific variables are found among the underlying causes and a departure from standard analysis may improve the model fit and the efficiency of estimates, depending on the chosen modeling approach. The introduction of uncertainty about the future state of the Gulf increases the acceptance of the valuation scenario which may indicate an increased credibility of a proposed scenario. In conclusion, modeling preference heterogeneity is an essential part of the analysis of discrete choice data. The results regarding uncertainty in stating one s preferences and non-standard choice behavior are promising: accounting for these anomalies in the analysis may improve the precision of the estimates of benefit from reduced eutrophication in the Gulf of Finland.

Valuing maternity care: a comparison of stated preference methods with an application to cost-benefit analysis

This research investigates whether a reconfiguration of maternity services, which collocates consultant- and midwifery-led care, reflects demand and value for money in Ireland. Qualitative and quantitative research is undertaken to investigate demand and an economic evaluation is performed to evaluate the costs and benefits of the different models of care. Qualitative research is undertaken to identify women’s motivations when choosing place of delivery. These data are further used to inform two stated preference techniques: a discrete choice experiment (DCE) and contingent valuation method (CVM). These are employed to identify women’s strengths of preferences for different features of care (DCE) and estimate women’s willingness to pay for maternity care (CVM), which is used to inform a cost-benefit analysis (CBA) on consultant- and midwifery-led care. The qualitative research suggests women do not have a clear preference for consultant or midwifery-led care, but rather a hybrid model of care which closely resembles the Domiciliary Care In and Out of Hospital (DOMINO) scheme. Women’s primary concern during care is safety, meaning women would only utilise midwifery-led care when co-located with consultant-led care. The DCE also finds women’s preferred package of care closely mirrors the DOMINO scheme with 39% of women expected to utilise this service. Consultant- and midwifery-led care would then be utilised by 34% and 27% of women, respectively. The CVM supports this hierarchy of preferences where consultant-led care is consistently valued more than midwifery-led care – women are willing to pay €956.03 for consultant-led care and €808.33 for midwifery-led care. A package of care for a woman availing of consultant- and midwifery-led care is estimated to cost €1,102.72 and €682.49, respectively. The CBA suggests both models of care are cost-beneficial and should be pursued in Ireland. This reconfiguration of maternity services would maximise women’s utility, while fulfilling important objectives of key government policy.

Random Regret Minimization: Exploration of a New Choice Model for Environmental and Resource Economics

This paper introduces the discrete choice model-paradigm of Random Regret Minimization (RRM) to the field of environmental and resource economics. The RRM-approach has been very recently developed in the context of travel demand modelling and presents a tractable, regret-based alternative to the dominant choice-modelling paradigm based on Random Utility Maximization-theory (RUM-theory). We highlight how RRM-based models provide closed form, logit-type formulations for choice probabilities that allow for capturing semi-compensatory behaviour and choice set-composition effects while being equally parsimonious as their utilitarian counterparts. Using data from a Stated Choice-experiment aimed at identifying valuations of characteristics of nature parks, we compare RRM-based models and RUM-based models in terms of parameter estimates, goodness of fit, elasticities and consequential policy implications.

Improving the analysis of road pricing acceptability surveys by using hybrid models

Several international studies have analyzed the acceptability of road pricing schemes by means of an attitude survey in combination with the results of a stated choice experiment using both a descriptive analysis and a discrete-choice model with binary choice (?accept? or ?not accept? the toll). However, the use of hybrid discrete choice models constitutes an innovative alternative for integrating subjective attitudes and perceptions deriving from the survey of attitudes with the more objective variables from the stated choice experiment. This paper analyzes the results of applying these models to measure the acceptability of interurban road pricing among different groups of stakeholders (road freight and passenger operators, highway concessionaires, and associations of private car users) with qualitatively significant opinions on road pricing measures. Our results show that hybrid models are better suited to explaining the acceptability of a road pricing scheme by different groups of stakeholders than a separate analysis of the survey of attitudes and a discrete-choice model applied on a stated choice experiment. A particular finding was that the strong psycho-social latent variable of the perception of fairness explains the rejection or acceptance of a toll scheme by road stakeholders.

Discrete linear stability and sensitivity analysis of fluid flows

Este trabajo presenta un método discreto para el cálculo de estabilidad hidrodinámica y análisis de sensibilidad a perturbaciones externas para ecuaciones diferenciales y en particular para las ecuaciones de Navier-Stokes compressible. Se utiliza una aproximación con variable compleja para obtener una precisión analítica en la evaluación de la matriz Jacobiana. Además, mapas de sensibilidad para la sensibilidad a las modificaciones del flujo de base y a una fuerza constante permiten identificar las regiones del campo fluido donde una modificacin (ej. fuerza puntual) tiene un efecto estabilizador del flujo. Se presentan cuatro casos de prueba: (1) un caso analítico para comprobar la derivación discreta, (2) una cavidad cerrada a bajo Reynolds para mostrar la mayor precisión en el cálculo de los valores propios con la aproximación de paso complejo, (3) flujo 2D en un cilindro circular para validar la metodología, y (4) flujo en un cavidad abierta, presentado para validar el método en casos de inestabilidades convectivamente inestables. Los tres últimos casos mencionados (2-4) se resolvieron con las ecuaciones de Navier-Stokes compresibles, utilizando un método Discontinuous Galerkin Spectral Element Method. Se obtuvo una buena concordancia para el caso de validación (3), cuando se comparó el nuevo método con resultados de la literatura. Además, este trabajo muestra que para el cálculo de los modos propios directos y adjuntos, así como para los mapas de sensibilidad, el uso de variables complejas es de suprema importancia para obtener una predicción precisa. El método descrito es aplicado al análisis para la estabilización de la estela generada por un disco actuador, que representa un modelo sencillo para hélices, rotores de helicópteros o turbinas eólicas. Se explora la primera bifurcación del flujo para un disco actuador, y se sugiere que está asociada a una inestabilidad de tipo Kelvin-Helmholtz, cuya estabilidad se controla con en el número de Reynolds y en la resistencia del disco actuador (o fuerza resistente). En primer lugar, se verifica que la disminución de la resistencia del disco tiene un efecto estabilizador parecido a una disminución del Reynolds. En segundo lugar, el análisis hidrodinmico discreto identifica dos regiones para la colocación de una fuerza puntual que controle las inestabilidades, una cerca del disco y otra en una zona aguas abajo. En tercer lugar, se muestra que la inclusión de un forzamiento localizado cerca del actuador produce una estabilización más eficiente que al forzar aguas abajo. El análisis de los campos de flujo controlados confirma que modificando el gradiente de velocidad cerca del actuador es más eficiente para estabilizar la estela. Estos resultados podrían proporcionar nuevas directrices para la estabilización de la estela de turbinas de viento o de marea cuando estén instaladas en un parque eólico y minimizar las interacciones no estacionarias entre turbinas. ABSTRACT A discrete framework for computing the global stability and sensitivity analysis to external perturbations for any set of partial differential equations is presented. In particular, a complex-step approximation is used to achieve near analytical accuracy for the evaluation of the Jacobian matrix. Sensitivity maps for the sensitivity to base flow modifications and to a steady force are computed to identify regions of the flow field where an input could have a stabilising effect. Four test cases are presented: (1) an analytical test case to prove the theory of the discrete framework, (2) a lid-driven cavity at low Reynolds case to show the improved accuracy in the calculation of the eigenvalues when using the complex-step approximation, (3) the 2D flow past a circular cylinder at just below the critical Reynolds number is used to validate the methodology, and finally, (4) the flow past an open cavity is presented to give an example of the discrete method applied to a convectively unstable case. The latter three (2–4) of the aforementioned cases were solved with the 2D compressible Navier–Stokes equations using a Discontinuous Galerkin Spectral Element Method. Good agreement was obtained for the validation test case, (3), with appropriate results in the literature. Furthermore, it is shown that for the calculation of the direct and adjoint eigenmodes and their sensitivity maps to external perturbations, the use of complex variables is paramount for obtaining an accurate prediction. An analysis for stabilising the wake past an actuator disc, which represents a simple model for propellers, helicopter rotors or wind turbines is also presented. We explore the first flow bifurcation for an actuator disc and it suggests that it is associated to a Kelvin- Helmholtz type instability whose stability relies on the Reynolds number and the flow resistance applied through the disc (or actuator forcing). First, we report that decreasing the disc resistance has a similar stabilising effect to an decrease in the Reynolds number. Second, a discrete sensitivity analysis identifies two regions for suitable placement of flow control forcing, one close to the disc and one far downstream where the instability originates. Third, we show that adding a localised forcing close to the actuator provides more stabilisation that forcing far downstream. The analysis of the controlled flow fields, confirms that modifying the velocity gradient close to the actuator is more efficient to stabilise the wake than controlling the sheared flow far downstream. An interesting application of these results is to provide guidelines for stabilising the wake of wind or tidal turbines when placed in an energy farm to minimise unsteady interactions.

Modelling urban public transit users' route choice behaviour: review and outlook

This paper reviews the main development of approaches to modelling urban public transit users’ route choice behaviour from 1960s to the present. The approaches reviewed include the early heuristic studies on finding the least cost transit route and all-or-nothing transit assignment, the bus common line problem and corresponding network representation methods, the disaggregate discrete choice models which are based on random utility maximization assumptions, the deterministic use equilibrium and stochastic user equilibrium transit assignment models, and the recent dynamic transit assignment models using either frequency or schedule based network formulation. In addition to reviewing past outcomes, this paper also gives an outlook into the possible future directions of modelling transit users’ route choice behaviour. Based on the comparison with the development of models for motorists’ route choice and traffic assignment problems in an urban road area, this paper points out that it is rewarding for transit route choice research to draw inspiration from the intellectual outcomes out of the road area. Particularly, in light of the recent advancement of modelling motorists’ complex road route choice behaviour, this paper advocates that the modelling practice of transit users’ route choice should further explore the complexities of the problem.

Conducting statistical tests of hypotheses : five common misconceptions found in transportation research

Most statistical methods use hypothesis testing. Analysis of variance, regression, discrete choice models, contingency tables, and other analysis methods commonly used in transportation research share hypothesis testing as the means of making inferences about the population of interest. Despite the fact that hypothesis testing has been a cornerstone of empirical research for many years, various aspects of hypothesis tests commonly are incorrectly applied, misinterpreted, and ignored—by novices and expert researchers alike. On initial glance, hypothesis testing appears straightforward: develop the null and alternative hypotheses, compute the test statistic to compare to a standard distribution, estimate the probability of rejecting the null hypothesis, and then make claims about the importance of the finding. This is an oversimplification of the process of hypothesis testing. Hypothesis testing as applied in empirical research is examined here. The reader is assumed to have a basic knowledge of the role of hypothesis testing in various statistical methods. Through the use of an example, the mechanics of hypothesis testing is first reviewed. Then, five precautions surrounding the use and interpretation of hypothesis tests are developed; examples of each are provided to demonstrate how errors are made, and solutions are identified so similar errors can be avoided. Remedies are provided for common errors, and conclusions are drawn on how to use the results of this paper to improve the conduct of empirical research in transportation.

Bayesian multinomial logit: Theory and route choice example

Statisticians along with other scientists have made significant computational advances that enable the estimation of formerly complex statistical models. The Bayesian inference framework combined with Markov chain Monte Carlo estimation methods such as the Gibbs sampler enable the estimation of discrete choice models such as the multinomial logit (MNL) model. MNL models are frequently applied in transportation research to model choice outcomes such as mode, destination, or route choices or to model categorical outcomes such as crash outcomes. Recent developments allow for the modification of the potentially limiting assumptions of MNL such as the independence from irrelevant alternatives (IIA) property. However, relatively little transportation-related research has focused on Bayesian MNL models, the tractability of which is of great value to researchers and practitioners alike. This paper addresses MNL model specification issues in the Bayesian framework, such as the value of including prior information on parameters, allowing for nonlinear covariate effects, and extensions to random parameter models, so changing the usual limiting IIA assumption. This paper also provides an example that demonstrates, using route-choice data, the considerable potential of the Bayesian MNL approach with many transportation applications. This paper then concludes with a discussion of the pros and cons of this Bayesian approach and identifies when its application is worthwhile

Urban transit quality of service : user perception and behaviour

Despite its potential multiple contributions to sustainable policy objectives, urban transit is generally not widely used by the public in terms of its market share compared to that of automobiles, particularly in affluent societies with low-density urban forms like Australia. Transit service providers need to attract more people to transit by improving transit quality of service. The key to cost-effective transit service improvements lies in accurate evaluation of policy proposals by taking into account their impacts on transit users. If transit providers knew what is more or less important to their customers, they could focus their efforts on optimising customer-oriented service. Policy interventions could also be specified to influence transit users’ travel decisions, with targets of customer satisfaction and broader community welfare. This significance motivates the research into the relationship between urban transit quality of service and its user perception as well as behaviour. This research focused on two dimensions of transit user’s travel behaviour: route choice and access arrival time choice. The study area chosen was a busy urban transit corridor linking Brisbane central business district (CBD) and the St. Lucia campus of The University of Queensland (UQ). This multi-system corridor provided a ‘natural experiment’ for transit users between the CBD and UQ, as they can choose between busway 109 (with grade-separate exclusive right-of-way), ordinary on-street bus 412, and linear fast ferry CityCat on the Brisbane River. The population of interest was set as the attendees to UQ, who travelled from the CBD or from a suburb via the CBD. Two waves of internet-based self-completion questionnaire surveys were conducted to collect data on sampled passengers’ perception of transit service quality and behaviour of using public transit in the study area. The first wave survey is to collect behaviour and attitude data on respondents’ daily transit usage and their direct rating of importance on factors of route-level transit quality of service. A series of statistical analyses is conducted to examine the relationships between transit users’ travel and personal characteristics and their transit usage characteristics. A factor-cluster segmentation procedure is applied to respodents’ importance ratings on service quality variables regarding transit route preference to explore users’ various perspectives to transit quality of service. Based on the perceptions of service quality collected from the second wave survey, a series of quality criteria of the transit routes under study was quantitatively measured, particularly, the travel time reliability in terms of schedule adherence. It was proved that mixed traffic conditions and peak-period effects can affect transit service reliability. Multinomial logit models of transit user’s route choice were estimated using route-level service quality perceptions collected in the second wave survey. Relative importance of service quality factors were derived from choice model’s significant parameter estimates, such as access and egress times, seat availability, and busway system. Interpretations of the parameter estimates were conducted, particularly the equivalent in-vehicle time of access and egress times, and busway in-vehicle time. Market segmentation by trip origin was applied to investigate the difference in magnitude between the parameter estimates of access and egress times. The significant costs of transfer in transit trips were highlighted. These importance ratios were applied back to quality perceptions collected as RP data to compare the satisfaction levels between the service attributes and to generate an action relevance matrix to prioritise attributes for quality improvement. An empirical study on the relationship between average passenger waiting time and transit service characteristics was performed using the service quality perceived. Passenger arrivals for services with long headways (over 15 minutes) were found to be obviously coordinated with scheduled departure times of transit vehicles in order to reduce waiting time. This drove further investigations and modelling innovations in passenger’ access arrival time choice and its relationships with transit service characteristics and average passenger waiting time. Specifically, original contributions were made in formulation of expected waiting time, analysis of the risk-aversion attitude to missing desired service run in the passengers’ access time arrivals’ choice, and extensions of the utility function specification for modelling passenger access arrival distribution, by using complicated expected utility forms and non-linear probability weighting to explicitly accommodate the risk of missing an intended service and passenger’s risk-aversion attitude. Discussions on this research’s contributions to knowledge, its limitations, and recommendations for future research are provided at the concluding section of this thesis.

Quantifying economic values of coastal and marine ecosystem services and assessing their use in decision-making : applications in New Caledonia and Australia

This thesis deals with the issues of quantifying economic values of coastal and marine ecosystem services and assessing their use in decision-making. The first analytical part of the thesis focuses on estimating non-market use and non-use values, with an application in New-Caledonia using Discrete Choice Experiment. The second part examines how and to what extent the economic valuation of ecosystem services is used in coastal management decision-making with an application in Australia. Using a multi-criteria analysis, the relative importance of ecological, social and economic evaluation criteria is also assessed in the context of coastal development.

Making decisions about antibiotic use in the Australian primary healthcare sector

Introduction Australia is contributing to the global problem of antimicrobial resistance with one of the highest rates of antibiotic use amongst OECD countries. Data from the Australian primary healthcare sector suggests unnecessary antibiotics were prescribed for conditions that will resolve without it. If left unchecked, this will result in more resistant micro-organisms, against which antibiotics will be useless. There is a lack of understanding about what is influencing decisions to use antibiotics – what factors influences general practitioners (GPs) to prescribe antibiotics, consumers to seek antibiotics, and pharmacists to fill old antibiotic prescriptions? It is also not clear how these individuals trade-off between the possible benefits that antibiotics may provide in the immediate/short term, against the longer term societal risk of antimicrobial resistance. Method This project will investigate (a) what factors drive decisions to use antibiotics for GPs, pharmacists and consumers, and (b) how these individuals discount the future. Factors will be gleaned from published literature and from a qualitative phase using semi-structured interviews, to inform the development of Discrete Choice Experiments (DCEs). Three DCEs will be constructed – one for each group of interest – to allow investigation of which factors are more important in influencing (a) GPs to prescribe antibiotics, (b) consumers to seek antibiotics, and (c) pharmacists to fill legally valid but old or repeat prescriptions of antibiotics. Regression analysis will be conducted to understand the relative importance of these factors. A Time Trade Off exercise will be developed to investigate how these individuals discount the future, and whether GPs and pharmacists display the same extent of discounting the future, as consumers. Expected Results Findings from the DCEs will provide an insight into which factors are more important in driving decision making in antibiotic use for GPs, pharmacists and consumers. Findings from the Time Trade Off exercise will show what individuals are willing to trade for preserving the miracle of antibiotics. Conclusion The emergence of antibiotic resistance is inevitable. This research will expand on what is currently known about influencing desired behaviour change in antibiotic use, in the fight against antibiotic resistance. Real World Implications Research findings will contribute to existing national programs to bring about a reduction in inappropriate use of antibiotic in Australia. Specifically, influencing (1) how key messages and public health campaigns are crafted to increase health literacy, and (2) clinical education and empowerment of GPs and pharmacists to play a more responsive role as stewards of antibiotic use in the community.

Non-market use and non-use values for preserving ecosystem services over time : a choice experiment application to coral reef ecosystems in New Caledonia

Non-use values (i.e. economic values assigned by individuals to ecosystem goods and services unrelated to current or future uses) provide one of the most compelling incentives for the preservation of ecosystems and biodiversity. Assessing the non-use values of non-users is relatively straightforward using stated preference methods, but the standard approaches for estimating non-use values of users (stated decomposition) have substantial shortcomings which undermine the robustness of their results. In this paper, we propose a pragmatic interpretation of non-use values to derive estimates that capture their main dimensions, based on the identification of a willingness to pay for ecosystem protection beyond one's expected life. We empirically test our approach using a choice experiment conducted on coral reef ecosystem protection in two coastal areas in New Caledonia with different institutional, cultural, environmental and socio-economic contexts. We compute individual willingness to pay estimates, and derive individual non-use value estimates using our interpretation. We find that, a minima, estimates of non-use values may comprise between 25 and 40% of the mean willingness to pay for ecosystem preservation, less than has been found in most studies.

Making decisions about antibiotic use in the Australian primary healthcare sector

Background Australia has one of the highest rates of antibiotic use amongst OECD countries. Data from the Australian primary healthcare sector suggests unnecessary antibiotics were prescribed for self-resolving conditions. We need to better understand what drives general practitioners (GPs) to prescribe antibiotics, consumers to seek antibiotics, and pharmacists to fill repeat antibiotic prescriptions. It is also not clear how these individuals trade-off between the possible benefits that antibiotics may provide in the immediate/short term, against the longer term societal risk of antimicrobial resistance. This project investigates what factors drive decisions to use antibiotics for GPs, pharmacists and consumers, and how these individuals discount the future. Methods Factors will be gleaned from published literature and from semi-structured interviews, to inform the development of Discrete Choice Experiments (DCEs). Three DCEs will be constructed – one for each group of interest – to allow investigation of which factors are more important in influencing (a) GPs to prescribe antibiotics, (b) consumers to seek antibiotics, and (c) pharmacists to fill legally valid but old or repeat prescriptions of antibiotics. Regression analysis will be conducted to understand the relative importance of these factors. A Time Trade Off exercise will be developed to investigate how these individuals discount the future. Results Findings from the DCEs will provide an insight into which factors are more important in driving decision making in antibiotic use for GPs, pharmacists and consumers. Findings from the Time Trade Off exercise will show what individuals are willing to trade for preserving the miracle of antibiotics. Conclusion Research findings will contribute to existing national programs to bring about a reduction in inappropriate use of antibiotic in Australia. Specifically, influencing how key messages and public health campaigns are crafted, and clinical education and empowerment of GPs and pharmacists to play a more responsive role as stewards of antibiotic use in the community.

Essays on economics networks

This thesis belongs to the growing field of economic networks. In particular, we develop three essays in which we study the problem of bargaining, discrete choice representation, and pricing in the context of networked markets. Despite analyzing very different problems, the three essays share the common feature of making use of a network representation to describe the market of interest.

In Chapter 1 we present an analysis of bargaining in networked markets. We make two contributions. First, we characterize market equilibria in a bargaining model, and find that players' equilibrium payoffs coincide with their degree of centrality in the network, as measured by Bonacich's centrality measure. This characterization allows us to map, in a simple way, network structures into market equilibrium outcomes, so that payoffs dispersion in networked markets is driven by players' network positions. Second, we show that the market equilibrium for our model converges to the so called eigenvector centrality measure. We show that the economic condition for reaching convergence is that the players' discount factor goes to one. In particular, we show how the discount factor, the matching technology, and the network structure interact in a very particular way in order to see the eigenvector centrality as the limiting case of our market equilibrium.

We point out that the eigenvector approach is a way of finding the most central or relevant players in terms of the “global” structure of the network, and to pay less attention to patterns that are more “local”. Mathematically, the eigenvector centrality captures the relevance of players in the bargaining process, using the eigenvector associated to the largest eigenvalue of the adjacency matrix of a given network. Thus our result may be viewed as an economic justification of the eigenvector approach in the context of bargaining in networked markets.

As an application, we analyze the special case of seller-buyer networks, showing how our framework may be useful for analyzing price dispersion as a function of sellers and buyers' network positions.

Finally, in Chapter 3 we study the problem of price competition and free entry in networked markets subject to congestion effects. In many environments, such as communication networks in which network flows are allocated, or transportation networks in which traffic is directed through the underlying road architecture, congestion plays an important role. In particular, we consider a network with multiple origins and a common destination node, where each link is owned by a firm that sets prices in order to maximize profits, whereas users want to minimize the total cost they face, which is given by the congestion cost plus the prices set by firms. In this environment, we introduce the notion of Markovian traffic equilibrium to establish the existence and uniqueness of a pure strategy price equilibrium, without assuming that the demand functions are concave nor imposing particular functional forms for the latency functions. We derive explicit conditions to guarantee existence and uniqueness of equilibria. Given this existence and uniqueness result, we apply our framework to study entry decisions and welfare, and establish that in congested markets with free entry, the number of firms exceeds the social optimum.

Willingness to Pay for Rural Landscape Improvements: Combining Mixed Logit and Random-Effects Models

This paper reports the findings from a discrete-choice experiment designed to estimate the economic benefits associated with rural landscape improvements in Ireland. Using a mixed logit model, the panel nature of the dataset is exploited to retrieve willingness-to-pay values for every individual in the sample. This departs from customary approaches in which the willingness-to-pay estimates are normally expressed as measures of central tendency of an a priori distribution. Random-effects models for panel data are subsequently used to identify the determinants of the individual-specific willingness-to-pay estimates. In comparison with the standard methods used to incorporate individual-specific variables into the analysis of discrete-choice experiments, the analytical approach outlined in this paper is shown to add considerable explanatory power to the welfare estimates.