Comparing Individual-Specific Benefit Estimates for Public Goods: Finite Versus Continuous Mixing in Logit Models

35 Pages Posted: 13 Nov 2004

See all articles by Riccardo Scarpa

Riccardo Scarpa

University of Waikato - Management School

Kenneth G. Willis

CREAM, Centre for Research on Environmental Appraisal & Management, UK; University of Newcastle

Melinda Acutt

University of Liverpool

Date Written: November 2004

Abstract

Multi-attribute stated preference data, derived through choice experiments, is used to investigate the consequence of a finite number of preference groups in a sample of Yorkshire Water residential customers on the conditional distributions of willingness to pay in the sample. The research focuses on 'public good' values, and retrieves the implicit customer specific welfare measures conditional on a sequence of four observed choices. We assess and contrast the sample evidence for the presence of a finite number of 2, 3, 4 and 5 latent preference groups (classes), and contrast these with the presence of a continuous distribution of parameter estimates using mixed logit models. The main focus is the conditional valuations in the form of marginal values for the consequence of waste water handling and treatment, namely: river water quality, area flooding by sewage, presence of odour and flies, and other water related amenities.

Keywords: Choice experiments, Mixed logit, Latent classes, Individual-specific

JEL Classification: C25, C42, H41

Suggested Citation

Scarpa, Riccardo and Willis, Kenneth G. and Acutt, Melinda, Comparing Individual-Specific Benefit Estimates for Public Goods: Finite Versus Continuous Mixing in Logit Models (November 2004). FEEM Working Paper No. 132.04. Available at SSRN: https://ssrn.com/abstract=615643 or http://dx.doi.org/10.2139/ssrn.615643

Riccardo Scarpa (Contact Author)

University of Waikato - Management School ( email )

Hamilton
New Zealand

Kenneth G. Willis

CREAM, Centre for Research on Environmental Appraisal & Management, UK ( email )

University of Newcastle
NE1 7RU Newcastle Upon Tyne
United Kingdom

University of Newcastle

5 Barrack Road
Devonshire Building
NE1 7RU Newcastle upon Tyne, NE1 7RU
United Kingdom

Melinda Acutt

University of Liverpool

Eleanor Rathbone Building
Bedford Street North Department of Economics & Accounting
Liverpool L69 7ZA
United Kingdom
+44 (0)151 794-3040 (Phone)
+44 (0)151 794-3028 (Fax)

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