Issues in the estimation and application of latent structure models of choice

Our paper provides a brief review and summary of issues and advances in the use of latent structure and other finite mixture models in the analysis of choice data. Focus is directed to three primary areas: (1) estimation and computational issues, (2) specification and interpretation issues, and (3) future research issues. We comment on what latent structure models have promised, what has been, to date, delivered, and what we should look forward to in the future.     

Earnings on the Information Technology Roller Coaster: Insight from Matched Employer-Employee Data

This article uses matched employer-employee data for the State of Georgia to examine workers' earnings experience through the information technology (IT) sector's employment boom of the mid-1990s and bust in the early 2000s. The results show that even after controlling for pre-boom individual characteristics, transitioning out of the IT sector to a non-IT industry generally resulted in a large wage penalty. However, IT service workers who transitioned to a non-IT industry still fared better than workers who took a non-IT employment path. For IT manufacturing workers, there is no benefit to having been touched by technology, likely because of the nontransferability of manufacturing experience to other industries.     

A Question of Integrity: Variants of Bt Cotton,Pesticides and Productivity in Pakistan

Bt cotton remains one of the most widely grown biotech crops among smallholder farmers in lower income countries, and numerous studies attest to its advantages. However, the effectiveness of Bt toxin, which depends on many technical constraints, is heterogeneous. In Pakistan, the diffusion of Bt cotton occurred despite a weak regulatory system and without seed quality control; whether or not many varieties sold as Bt are in fact Bt is also questionable. We utilise nationally representative sample data to test the effects of Bt cotton use on productivity. Unlike previous studies, we invoke several indicators of Bt identity: variety name, official approval status, farmer belief, laboratory tests of Bt presence in plant tissue, and biophysical assays measuring Bt effectiveness. Only farmer belief affects cotton productivity in the standard production model, which does not treat Bt appropriately as damage‐abating. In the damage control framework, all Bt indicators reduce damage from pests. Biophysical indicators have the largest effect and official approval has the weakest. Findings have implications for impact measurement. For policy‐makers, they suggest the need, on ethical and productivity grounds, to improve variety information and monitor variety integrity closer to point of sale.     

Gender differences in knowledge and attitude regarding breastfeeding

The literature presented evidence that the opinions and attitudes of the father or male partner towards breastfeeding have a strong positive correlation with breastfeeding initiation and duration. Men are also found less knowledgeable about breastfeeding and are more positive towards formula feeding than women. Using a survey of college‐aged men and women, this study provides in‐depth understanding of gender differences in knowledge and attitude regarding breastfeeding. The Infant Feeding Knowledge Test and the Iowa Infant Feeding Attitude Scale were included in the questionnaire in addition to questions about the respondents' intention to breastfeed, exposure to breastfeeding during infancy and socio‐demographic characteristics of the family of origin. The final sample consists of 181 women and 88 men enrolled in a university in the Southern US. Linear regressions with gender interaction terms were estimated in order to isolate the gender‐specific correlations between their family background and their knowledge and attitude regarding breastfeeding. A series of Chi‐square tests examined whether the regression coefficients were significantly different between men and women. Results support existing evidence of gender gap in breastfeeding knowledge and attitude. More importantly, the study reveals that the influence of one's family background on their knowledge and attitude regarding breastfeeding is significantly different between men and women. It suggests a possibility of greater disagreement regarding feeding choices within a higher socioeconomic status (SES) couple. Theoretical and practical implications of the findings are discussed.     

Optimised asset replacement strategy in the presence of lead time uncertainty

This paper develops an optimal replacement strategy for capital intensive equipment with long delivery lead time. The strategy is based on an extended version of the real options approach to repeated replacement decisions, in which the goal is to determine the operating cost and delivery lead-time conditions upon which a replacement should be ordered.The real options approach to capital replacement problems is superior to traditional net present value (NPV) approaches, as it values of the option to adapt decisions based on current (rather than predicted) system conditions. However, previous applications of the real options approach to repeated replacement have not considered the impact of long and uncertain lead times, and have therefore focused on when to replace rather than when to order. Delivery lead times are an important consideration in an expanding mining sector in which demand for heavy mobile equipment (HME) exceeds the capacity of suppliers to provide the equipment in a timely manner.The inclusion of a lead time element results in a decision with an “option” period and an “option-less” period. Simulations are used to demonstrate the improved outcome of real options based replacement strategies compared with those derived using a traditional NPV approach, both with and without lead times. Further the performance of the order placement strategy with different boundary conditions, bounded and reflecting, is explored. No appreciable difference in performance of these strategies was identified. The optimal order placement strategy incorporating delivery lead times is displayed on a simple chart which is accessible to fleet management personnel.     

Smallholder Demand for Maize Hybrids in Zambia: How Far do Seed Subsidies Reach?

We add to an emerging body of literature on input subsidies in Africa south of the Sahara. Our analysis focuses on demand for seed, characterising smallholders with a high predicted demand for hybrid seed who were not reached by the subsidy programme. We use cross‐sectional data from the 2010 agricultural season and an instrumented control function approach to test the hypothesis that the subsidy on hybrid maize seed in Zambia is selectively biased. Consistent with other literature, we find that the subsidy is a recursive determinant of seed demand, but in 2010, its recipients had more land, more assets, and lower poverty rates. Findings illustrate the social costs of the programme as currently designed and highlight the need to build alternative supply channels if poorer maize growers are to grow hybrid seed.     

Demand for maize hybrids and hybrid change on smallholder farms in Kenya

Kenya is a globally recognized maize “success story.” As the overall percentage of maize farmers growing hybrids tops 80% and the seed industry matures, the slow pace of hybrid replacement on farms, and the continued dominance of the seed industry by Kenya Seed Company, may dampen productivity. Our econometric analysis identifies the factors that explain farmer demand for hybrid seed, and the age of hybrids they grow, considering hybrid seed ownership. Male‐headed households with more education, more assets, and more land plant more hybrid seed. Scale of seed demand per farm is differentiated by agroecology. We find a strong farmer response to the seed‐to‐grain price ratio, which we interpret as evidence of a commercial orientation even on household farms. However, despite the dramatic increase in the number of hybrids sold and the breadth of seed suppliers as seed markets liberalize, an older hybrid still dominates national demand.     

Valuing Pre-Commercial Genetic Resources: A Maximum Entropy Approach

Genetic improvement has been a major contributor to agricultural productivity in the United States, but many questions about the economics of crop breeding, such as the value of pre-commercial germplasm, remain unanswered. This study estimates the marginal value of poorly characterized materials contained in the U.S. national germplasm system. Within the search theoretic framework, we apply a maximum entropy method to estimate the probability and the expected level of improvement in pest susceptibility relative to its best previously observed level. The results indicate that the lower-bound estimate of benefit is significantly higher than the upper-bound cost of conserving an accession.