Working Papers in Economics, Department of Economics, University of Bergen
Arne Risa Hole
Mixed logit estimation of willingness to pay distributions: a comparison of models in preference and WTP space using data from a health-related choice experiment.
() and Julie Riise Kolstad
Abstract: Different approaches to modelling the distribution of WTP
are compared using stated preference data on Tanzanian Clinical Officers’
job choices and mixed logit models. The standard approach of specifying the
distributions of the coefficients and deriving WTP as the ratio of two
coefficients estimation in preference space) is compared to specifying the
distributions for WTP directly at the estimation stage (estimation in WTP
space). The models in preference space fit the data better than the
corresponding models in WTP space although the difference between the best
fitting models in the two estimation regimes is minimal. Moreover, the
willingness to pay estimates derived from the preference space models turn
out to be unrealistically high for many of the job attributes. The results
suggest that sensitivity testing using a variety of model specifications,
including estimation in WTP space, is recommended when using mixed logit
models to estimate willingness to pay distributions.
Keywords: WTP space; Stated preference methods; Discrete choice; Mixed logit; Willingness to pay*; (follow links to similar papers)
JEL-Codes: C50; I19; J40; (follow links to similar papers)
28 pages, March 1, 2010
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