Modeling Multiple-Objective Recreation Trips with Choices Over Trip Duration and Alternative Sites

Traditionally, recreation demand studies have focused on single-day, single-activity trips, despite anecdotal and empirical evidence that many recreational trips involve overnight stays and multiple purposes. This paper develops a random utility model that explores how visitors choose alternative sites and trip durations for multiple-objective trips. We focus on a recreational activity, beach visits, that appear to have significant proportions of the population taking single and multiple-day trips, and many of the multiple day trips involve multiple objectives. Multiple-duration and multiple-objective issues are incorporated in pricing trip costs. The results of the research suggest that the accepted method for incorporating travel costs into random utility models can lead to biased estimates of the structural utility parameters and, consequently, biased measures of welfare in a multiple-objective trip setting for single- and multiple-day users.     

Recreation demand estimation and valuation in spatially connected systems

Recreation demand models frequently are used to explain outdoor recreation behavior and to estimate willingness to pay for changes in environmental quality at recreation sites. Among the most commonly used recreation demand models are site choice models based on the multinomial logit framework, which account for the spatial relationships between each recreator's home and multiple alternative destinations thereby capturing the substitution possibilities among recreation sites. However, standard applications of this framework typically do not account for the possibility of spatial connections among the sites via movements of the target species, such as fish in connected water bodies in recreational angling applications or terrestrial species in hunting or wildlife viewing applications. In this paper we examine aspects of environmental valuation and natural resource dynamics that generally are addressed separately. Specifically, we show that in such spatially connected systems, a “reduced form” application of the standard site choice modeling approach, using proxy measures of environmental quality rather than direct measures of species abundances, can produce biased estimates of willingness to pay for environmental improvements. Furthermore, we show that under some conditions poorly targeted environmental improvements in spatially connected systems can lead to welfare decreases. In such systems a structural model of recreator site choices and species sorting behavior and population dynamics may be required to fully account for the spatial linkages among sites and the feedback effects between recreators and the target species.     

The Representative Consumer Approximation Bias in Discrete Choice Welfare Analysis

Discrete choice welfare analysis is essential in non-market valuation to accompany studies using choice experiments and recreation choice models. McFadden (in: Melvin, Moore, Riezman (eds) Trade, theory and econometrics: essays in honor of John S. Chipman, Routledge, London, 1999) shows that discrete choice welfare measures derived by the common representative consumer approach can be biased under nonlinear income effects, and the percentage bias increases monotonically with the size of quality improvement. We present contrary results that percentage measurement errors in such welfare measures can go either direction and provide conditions under which the direction of bias can be identified. We also show that price and non-price variables play different roles in discrete choice welfare analysis.     

Wealth Accounting,Exhaustible Resources and Social Welfare

The empirical literature on natural resource accounting uses methods which implicitly or explicitly entail measuring changes in total resource asset value when an exhaustible resource is depleted. In contrast, the growth theoretic literature on saving, social welfare and sustainable development is built upon a central finding, that the change in real wealth (as measured by net or ‘genuine’ saving) is proportional to the change in social welfare. We show that the change in total wealth exceeds the change in real wealth in optimal and non-optimal models of resource-extracting economies. This suggests that the change in social welfare is over-estimated when the change in total resource asset value is used as the measure of depletion. A simple empirical exercise, using World Bank data on ‘adjusted net saving’, reinforces the results from theory.     

Modelling the Effect of Chronic Wasting Disease on Recreational Hunting Site Choice Preferences and Choice Set Formation over Time

Chronic wasting disease (CWD) is a prion disease that affects deer, elk and other cervid wildlife species. Although there is no known link between the consumption of CWD affected meat and human health, hunters are advised to have animals from CWD affected areas tested and are advised against consuming meat from CWD infected animals (Government of Alberta 2010). We model hunter response to the knowledge that deer in a wildlife management unit have been found to have CWD in Alberta, Canada. We examine hunter site choice over two hunting seasons using revealed and stated preference data in models that incorporate preferences, choice set formation, and scale. We compare a fully endogenous choice set model using the independent availability logit model (Swait in Probabilistic choice set formation in transportation demand models. Dissertation, MIT, 1984) with the availability function approach (Cascetta and Papola in Transp Res C 9(4):249–263, 2001) that approximates choice set formation. We find that CWD incidence affects choice set formation and preferences and that ignoring choice set formation would result in biased estimates of impact and welfare measures. This study contributes to the broader recreation demand literature by incorporating choice set formation, scale and temporal impacts into a random utility model of recreation demand.     

Salience and social choice

The axioms of expected utility and discounted utility theory have been tested extensively. In contrast, the axioms of social welfare functions have only been tested in a few questionnaire studies involving choices between hypothetical income distributions. In a controlled experiment with 100 subjects placed in the role of social planners, we test five fundamental properties of social welfare functions to determine the efficacy of traditional social choice models in predicting social planner allocations when presented with choice sets designed to test the axioms of the theory. We find that three properties of the standard social welfare functions tested are systematically violated, producing an Allais paradox, a common ratio effect, and a framing effect in social choice. We find support for scale invariance and a preference for tail-increasing transfers. Our experiment also enables us to test a model of salience-based social choice which predicts the systematic deviations and highlights the close relationship between these anomalies and the classical paradoxes for risk and time.

     

Modeling Overnight Recreation Trip Choice: Application of a Repeated Nested Multinomial Logit Model

In this paper we apply the repeated nested multinomial logit model, a version of a random utility model (RUM), to estimate the choice of an overnight versus single day recreation trip, along with the other usual choice of which of the sites to visit, and less typically, the choice of whether to participate (in our application – to fish) at all. We also find statistically significant income effects in the empirical results. The application is to Atlantic Salmon fishing and the data set is for Maine resident angler's fishing trips to rivers in Maine and Canada.     

A comparison of regret-based and utility-based discrete choice modelling – an empirical illustration with hospital bed choice

There is some concern that the unobserved preference heterogeneity in random utility maximization theory-based discrete choice experiment modelling is an important source of error variability. The randomness in utility is often interpreted as interpersonal preference heterogeneity but it can also be intrapersonal random variation in preferences. We compare utility maximization and regret minimization-based choice models’ sensitivity to individual heterogeneity, examine differences between two consecrated models and validate with empirical illustrations. We use frequency of category (public, semi-private, and private) of bed chosen from Swiss cross-sectional datasets (2007–2012) to compare two approaches – utility maximization and regret minimization by applying multinomial logit (MNL) models in regard to the variances in utility (regret) function, goodness-of-fit and predicted marginal effects (pseudo-elasticity) of additional payment. We find parameters with the same sign and estimates with almost same order of magnitude in both the approaches. The statistical significance of attribute effects is consistent in all variants of utility -based MNL models while effects of different attributes are significant only in heteroskedastic extreme value (HEV) variant of regret-based MNL models. This empirical illustration suggests that HEV variant of regret-based models perform better in capturing attribute effects in choice behaviour.     

基于选择实验法的环境资源属性价值评价及实证研究

建立条件Logit模型和随机参数Logit模型,利用效用理论、福利经济学理论研究了滨海资源环境属性的重要性、边际价值以及环境资源状态改变对社会福利的影响。以大连市付家庄滨海公园为例,利用问卷调查数据进行实证研究。结果表明:随机参数Logit模型的拟合度比条件Logit模型要高、其回归效果更好;受访者对改善环境资源属性均持较为积极的态度,游客对环境资源属性的偏好程度由高到低为海水能见度、沙滩舒适度、沙滩清洁度和海洋生物种群数量;在付家庄滨海公园的当前环境下,游客的社会福利价值为64.82元/人,环境资源属性组合的最佳(最差)状态下游客的社会福利价值为127.12元/人(-18.18元/人),当前环境资源状态并非理想状态,还可以进一步改善。     

Modelling and mapping spatial heterogeneity in forest recreation services

Modelling and spatial mapping of recreation services require attention to both demand and supply factors. This paper combines recreational choice modelling and economic valuation with GIS based techniques to allow an assessment of the spatial diversity of the value of forest recreation services. The data for the analysis is a national study of the car borne recreational use of Danish forest sites. A random utility framework is used and a comparison between the standard fixed coefficient model and a mixed logit model is made. The results show that the different specifications of the random utility models reveal similar preferences for the measured forest attributes in terms of sign and magnitude. The spatial predictions, however, reveal a considerable difference in the spatial pattern of economic benefits from recreation between the two models. These results have implications for current ecosystem service mapping initiatives as they emphasise the need to account for spatial heterogeneity in preferences, and aggregate demand and environmental attributes and infrastructure.     

Non-market Value of Winter Outdoor Recreation in the Swiss Alps: The Case of Val Bedretto

A longstanding interest from environmental economists on winter outdoor recreation has overlooked activities practiced outside the boundaries of winter resorts—e.g. ski mountaineering. This paper implements the Travel Cost Method to estimate consumer surplus per season derived from ski mountaineering and snowshoeing in Val Bedretto—a valley located in the Swiss Alps. In addition, the Contingent Behavior Method is used to estimate the changes in welfare associated with the construction of an alpine center that would provide services aiming to reduce the risk of injury and death associated with winter outdoor recreation. The data is analyzed by means of latent class panel on-site count models. The latent class approach allows us to identify subpopulations that benefit from the alpine center. The results show that 33% of visitors would experience an increase in their consumer surplus per season equivalent to €31 per visitor.     

Latent Consideration Sets and Continuous Demand Systems

This paper develops a theoretically consistent continuous demand system model that incorporates latent, probabilistic consideration sets. In contrast to existing discrete choice consideration models, the proposed model is econometrically tractable with consumption data for many goods. The model’s empirical properties are illustrated with an 89-site recreation data set from the 1994 National Survey of Recreation and the Environment (NSRE). Parameter and welfare estimates suggest that the latent consideration set models fit the data better and may imply a bias-variance tradeoff relative to traditional models.      

Compensating Variation and Hicksian Choice Probabilities in Random Utility Models that are Nonlinear in Income

In this paper we discuss Hicksian demand and compensating variation in the context of discrete choice. We first derive Hicksian choice probabilities and the distribution of the (random) expenditure function in the general case when the utilities are nonlinear in income. We subsequently derive exact and simple formulae for the expenditure and choice probabilities under price (policy) changes conditional on the initial utility level. This is of particular interest for welfare measurement because it enables the researcher to compute the distribution of compensating variation in a simple way. We also derive formulae for the joint distribution of expenditure, the choice before and after a policy change has been introduced.     

SIZE MATTERS: THE ECONOMIC VALUE OF BEACH EROSION AND NOURISHMENT IN SOUTHERN CALIFORNIA

Despite the widespread use of nourishment in California, few studies estimate the welfare benefits of increased beach width. This paper relies on panel data funded by National Oceanic and Atmospheric Administration and other agencies. Beach choices of respondents were combined with beach attribute data to reveal how changes in width affect choice and the economic value of beach visits. We use a random‐utility approach to show that the value of beach width varies for different types of beach uses: water contact, sand‐, and pavement‐based activities. We also find that the marginal value of beach width depends on initial beach width. (JEL Q50)     

Semi-parametric discrete choice measures of willingness to pay

A semi-parametric discrete choice method is proposed to recover welfare measures from individual choice data. The proposed method is compared with the traditional binary choice models in an application to measure benefits of recreation trips.     

Three pitfalls in the construction of family-based models of population growth

This paper describes 3 pitfalls in the construction of family-based models of population growth which must be avoided if internal consistency and empirical relevance are to be maintained. Models of the family in which the number as well as the quality of children are subject to choice were pioneered by Becker in 1960 and more recently have served as a base for the theoretical analysis of population size. In these economic models of population, family size and bequests are the outcomes of utility-maximizing family decisions, with the utility of each family viewed as depending on family consumption, family size, and prospective welfare of children, while the age structure of the population is an endogenous variable. All the models are static and focus on the properties of steady states. The 1st pitfall concerns the internal logical consistency of the models and consists in the possibility that the typical family's maximization problem may have no solution, even with a well-behaved concave utility function. The other 2 pitfalls concern the consistency of the model with some "gross facts of life", 1 deriving from the possibility that, even when the family's maximization problem has a solution, the phase diagram for the stock of capital may contain no steady state other than the origin, and the other that even when there exists a non-trivial steady state for the stock of capital, the community may nevertheless face extinction. The 3 pitfalls can be avoided if utility and production functions are subjected to more stringent restrictions than are usually found in economic theory.     

THE PURE CHARACTERISTICS DEMAND MODEL*

In this article, we consider a class of discrete choice models in which consumers care about a finite set of product characteristics. These models have been used extensively in the theoretical literature on product differentiation and the goal of this article is to translate them into a form that is useful for empirical work. Most recent econometric applications of discrete choice models implicitly let the dimension of the characteristic space increase with the number of products (they have “tastes for products”). The two models have different theoretical properties, and these, in turn, can have quite pronounced implications for both substitution patterns and for the welfare impacts of changes in the number and characteristics of the goods marketed. After developing those properties, we provide alternative algorithms for estimating the parameters of the pure characteristic model and compare their properties to those of the algorithm for estimating the model with tastes for products. We conclude with a series of Monte Carlo results. These are designed to illustrate: (i) the computational properties of the alternative algorithms for computing the pure characteristic model, and (ii) the differences in the implications of the pure characteristic model from the models with tastes for products.     

Asymmetric search and prospect theory: choice experiment on consumer willingness to search in the gasoline retail market

We use an internet survey conducted among a representative random sample of drivers in the State of Ohio consisting of a choice experiment designed to examine the mechanism driving asymmetric search. The internet survey affords us the opportunity to overcome endogeneity difficulties by imposing exogenous price changes on gasoline consumers to examine the decision-making process behind intended search decisions. We randomly assigned participants to one of five price treatments (either 2.5 or 5% above or below their reported expected price, or no change). We provide a simple empirical model to derive testable implications under prospect theory and use the internet survey to test them. Results indicate that among the respondents who faced prices below their expected price, only 12% chose to search, whereas 45% searched when prices were above. Further, we find results consistent with asymmetric search being driven by prospect theory. The change in consumers’ willingness to search is twice as large when prices exceed expectations by 2.5% relative to when prices exceed them by 5% suggesting that consumers derive utility of finding a good deal evaluated relative to a reference price. We show that this result is inconsistent with standard utility theory or consumers using alternative reference prices.     

Estimating Benefits for Effective Enforcement of Speed Reduction from Dichotomous-Choice CV

We present an empirical estimation of the distribution of WTP foreffective speed restriction via implementation of local trafficcalming schemes. Random samples are drawn from the populations ofhouseholds (henceforth HHs) of three centres intersected by maintrunk roads with varying through traffic conditions. We estimatethe underlying WTP distributions from discrete-choice responsesto site-specific referendum contingent valuation studiesaccounting for zero-bidders. We then test the hypothesis ofdifferent distributions across villages. The statistical analysisconsists first of a parametric specification and then of atotally non-parametric one. Stated welfare changes for effectivespeed reduction are found to be sizeable and the parameters ofthe random utility models are plausibly related to differences inobjective speed measures across centres. The results appear toencourage the use of the referencum-CV method in the estimationof local public goods. In this case study the proposed publicproject would seem to pass the Kaldor-Hicks potentialcompensation test.