Comparing models of unobserved heterogeneity in environmental choice experiments

Marit Kragt

No 144447, Working Papers from University of Western Australia, School of Agricultural and Resource Economics

Abstract: Choice experiments have become a widespread approach to non-market environmental valuation. Given the vast range of public opinions towards environmental management changes, it is desirable that analysis of discrete choice data accounts for the possibility of unobserved heterogeneity amongst the population. There is, however, no consensus about the best way to model individual heterogeneity. This paper presents four approaches to modelling heterogeneity that are increasingly used in the literature. Latent class, mixed logit, scaled multinomial logit and generalised mixed logit (GMXL) models are estimated using case study data for catchment environmental management in Australia. A GMXL model that accounts for preference and scale heterogeneity performs best. I evaluate the impacts of models on welfare estimates and discuss the merits of each modelling approach.

Keywords: Environmental Economics and Policy; Research Methods/ Statistical Methods (search for similar items in EconPapers)
Pages: 24
Date: 2013-02-10
New Economics Papers: this item is included in nep-dcm and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Comparing models of unobserved heterogeneity in environmental choice experiments (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwauwp:144447

DOI: 10.22004/ag.econ.144447

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