1 XI Riunione Scientifica Annuale - Società Italiana di Economia dei Trasporti e della Logistica “Trasporti, logistica e reti di imprese: competitività del sistema e ricadute sui territori locali”, Trieste, 15-18 giugno 2009 Individual and triadic preferences in a choice experiment on housing location: preference heterogeneity and relative power Edoardo Marcucci, Università di Roma Tre Amanda Blomberg Stathopoulos, Università di Trieste
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Edoardo Marcucci, Università di Roma Tre Amanda Blomberg Stathopoulos, Università di Trieste
XI Riunione Scientifica Annuale - Società Italiana di Economia dei Trasporti e della Logistica “Trasporti, logistica e reti di imprese: competitività del sistema e ricadute sui territori locali”, Trieste, 15-18 giugno 2009. - PowerPoint PPT Presentation
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XI Riunione Scientifica Annuale - Società Italiana di Economia dei Trasporti e della Logistica “Trasporti, logistica e reti di imprese: competitività del sistema e ricadute sui territori
locali”, Trieste, 15-18 giugno 2009
Individual and triadic preferences in a choice experiment on
housing location: preference heterogeneity and relative power
Edoardo Marcucci, Università di Roma TreAmanda Blomberg Stathopoulos, Università di
Trieste
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Outline
Study Context Research questions Related literature Methodology & Data description Econometric results Conclusions & Future research
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Study context
“Standard welfare and demand theory is based on individual preferences, and
modern theoretical analysis of household behaviour is based on the rejection of the
notion that households may be regarded as unitary decision makers rather than groups
of individuals (Becker).”
Quiggin. J., (1998) “Individual and Household Willingness to Pay for Public Goods”, American Journal of Agricultural Economics, Vol. 80, No. 1, pp. 58-63
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Research questions Given that household location choices are
taken jointly we control for:
attribute-specific preference heterogeneity among three members
(if relevant heterogeneity exists) who influences the family choices the most (at the attribute level)
potential polarization in collective choices This leads us to estimate the potential bias
compared to using the conventional (unitary) approach.
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Related literature Since the 1980s, the shortcomings of a “black box” approach
where the household is the basic unit of analysis have been exposed.
Joint and Individual preferences fail to “coincide” in numerous empirical tests regarding risk avversion, financial allocation, environmental WTP, labour choices, consumption of durables (car, vacation, housing) and activity patterns*.
A growing body of research is dedicated to1) finding the appropriate level of analysis to understand household behaviour,2) explore data collection methods,3) quantify power of influence and4) consider preference and IPS heterogeneity between members of a decision making unit.
* Arora & Allenby 1999, Corfman 1991, Dalleart 1998, Bateman & Munro 2003, Dosman & Adamowicz 2006, Hensher et al 2008, Beharry-Borg et al 2009, Marcucci et al (in press).
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Main contributions of current study
Adopting a triadic approach as opposed to the universally used dyadic one (i.e. couple based analysis),
Considering the child/adolescent as a decision maker in the household choice,
Focusing on hypotheses testing rather than a definition of a GUF,
Concentrating on attribute level influence patterns,
Controlling for polarization in household choice of residential location.
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Methodology We study household interaction via stated
choice experiments (single vs. joint interviews), Katz (1997), Manski (2000).
Household members were first asked to perform the choice experiments singularly and were stimulated to choose according to their personal preferences
Subsequently, after grouping together three family members, encouraging them to discuss and, then, choose a collectively acceptable housing alternative.
Model specifications MNL, MMNL, Individual-specific MMNL
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AttributesAttributes Levels Description of discrete level
Rent Level 1 20 % lower than current Level 2 10 % lower than current Level 3 Same as current Level 4 10 % higher than current Level 5 20 % higher than current
Noise Level 1 Quiet house Level 2 Low level of noise Level 3 Quite noisy Level 4 Very noisy
Air emissions Level 1 Very low level of emissions Level 2 Acceptable level of emissions Level 3 Quite high emissions Level 4 Very high emissions
Accessibility Level 1 50% Less time to reach work/school Level 2 Same distance as currently Level 3 50 % more time to reach work/school
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Data description Sample: 53 Italian families (53 adolescents,
53 mothers, 53 fathers & 53 joint interviews)Variables Unit of measurement Sample value
Age µ years Mother (50), Father (54), Adolescent (22)
Family size µ (min-max) 3,6 (3-6)
Travel by car % full sample 50%
Travel time µ time in minutes Mother (19), Father (23), Adolescent (20)
• Rent & Noise non random variables• SQ, Access, Air all random variables, normal dist & significant variance• Significant improvement compared to MNL specification
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Econometric results: daily WTP & WTA (cont.d)
• Similarity in results between model specifications• Coefficients have expected signs• Extremely high WTP for accessibility for the son (walking mode?)
MNL scale corr FAMILY SON MOTHER FATHER SQ (Ū/level) -3,46 -4,52 -2,31 -3,77
Concentration: RentIndividual and joint preferences for Rent
-0,008
-0,007
-0,006
-0,005
-0,004
-0,003
-0,002Individual Joint
Rent
(€)
Child Mother Father Family
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Polarization: AccessibilityIndividual and joint preferences for Accessibility
-0,08
-0,07
-0,06
-0,05
-0,04
-0,03
-0,02
-0,01Individual Joint
Acce
ss ti
me
to w
ork/
scho
ol (m
in)
Child Mother Father Family
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Concentration: Air PollutionIndividual and joint preferences for Air pollution
-1,1
-1
-0,9
-0,8
-0,7
-0,6
-0,5
-0,4
-0,3
Individual Joint
Leve
l of A
ir po
llutio
n
Child Mother Father Family
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No Difference: NoiseIndividual and joint preferences for Noise
-0,35
-0,3
-0,25
-0,2
-0,15
-0,1
-0,05
Individual Joint
Leve
l of N
oise
Child Mother Father Family
Unitary model would
produce unbiased estimates only for
this attribute (!)
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Polarization & Concentration: Overview
Individual and joint preferences for Rent
-0,008
-0,007
-0,006
-0,005
-0,004
-0,003
-0,002Individual Joint
Rent
(€)
Child Mother Father Family
Individual and joint preferences for Accessibility
-0,08
-0,07
-0,06
-0,05
-0,04
-0,03
-0,02
-0,01
Individual Joint
Acce
ss ti
me
to w
ork/
scho
ol (m
in)
Child Mother Father Family
Individual and joint preferences for Air pollution
-1,1
-1
-0,9
-0,8
-0,7
-0,6
-0,5
-0,4
-0,3
Individual Joint
Leve
l of A
ir po
llutio
n
Child Mother Father Family
Level of individual and joint preferences for SQ
0,3
0,4
0,5
0,6
0,7
0,8
0,9
Individual Joint
SQ
Child Mother Father Family
Access: Polarizedtowards son
Air: Concentratedtowards mother
Rent: Concentratedtowards mother
SQ: Polarizedtowards son
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CONCLUSIONSAt the individual level:
• We have detected relevant attribute-specific heterogeneity among members thus casting doubt on the representative member hypothesis (e.g. air pollution is considered differently by all members).
Comparing individual to household choices:• We have shown that different members have varying degree of influence in joint decisions for housing, (e.g. mother heavily influences for rent; son dominates accessibility)• we have discovered statistically significant polarization in collective choices (Status quo and accessibility)
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FUTURE RESEARCH will focus on:
Capturing heterogeneity in its various forms through advanced model specifications, such as: ML with heteroschedasticity in the variance of the parameters; Error components creating correlations among utilities of different alternatives,
The decision making process including different strategies for information processing (IPS) among members/groups,
Comparing the relative explanatory power of continuous (MMNL) or discrete (LC) mixing functions to discover latent groups once choice invariant variables (eg. Socio-economics and IPS) are introduced in group based models,
Explore cost-efficient and simplified data-collection methods to study group choices and test their robustness.
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FINE
Grazie per la vostra attenzione!
Domande?
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Research question (general) Is there empirical evidence to
question the unitary decision model? If so, what can we do to avoid biased
estimates? How can we model interaction within
groups? Especially, how do we measure
relative power among members.
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Methodology (cont.d) Discrete choice models RUM framework Different model specification:
MNL MMNL Individual-specific MMNL
Estimates produced Attribute coefficients and WTP Individual specific attribute coefficients and
WTP
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Test of representative member model (Mixed vs. Multinominal)LR of MMNL vs. MNL – 2 [ LL (r) - LL(u) ] ≥ 2
df u - re
ML improves MNL for all members
Variables Family Son Mother Father
MNL LL* -350,285 -386,083 -362,749 -389,316
MMNL LL* -287,505 -348,225 -300,531 -325,775
Number of Restrictions MNL 5 5 5 5
Number of Restrictions MMNL 8 8 8 8
Test Statistic LR=-2* [(LLr - LLu)] 125,56 75,72 124,44 127,08
Critical Chi-Squared Value at 95 % Confidence 7,81 7,81 7,81 7,81