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Interpretation issues in heteroscedastic conditional logit models

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  • Burton, Michael
  • Davis, Katrina
  • Kragt, Marit Ellen

Abstract

This paper identifies an issue with interpretation of significance within heteroscedastic conditional logit models, due to sensitivity of reported results to arbitrary variable-normalization decisions. We advocate the use of willingness-to-pay (WTP) space models to avoid this, as estimates of WTP do not exhibit this effect. However, in cases where error variance may be high, we question whether it is correct to infer that all respondents should be considered to hold a common WTP.

Suggested Citation

  • Burton, Michael & Davis, Katrina & Kragt, Marit Ellen, 2016. "Interpretation issues in heteroscedastic conditional logit models," Working Papers 235296, University of Western Australia, School of Agricultural and Resource Economics.
    • Handle: RePEc:ags:uwauwp:235296
    DOI: 10.22004/ag.econ.235296
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    References listed on IDEAS

    as
    1. Arne Risa Hole, 2006. "Small-sample properties of tests for heteroscedasticity in the conditional logit model," Economics Bulletin, AccessEcon, vol. 3(18), pages 1-14.
    2. Arne Risa Hole, 2006. "CLOGITHET: Stata module to estimate heteroscedastic conditional logit model," Statistical Software Components S456737, Boston College Department of Economics, revised 09 Feb 2009.
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    Cited by:

    1. Permadi, Dwiko B. & Burton, Michael & Pandit, Ram & Race, Digby & Walker, Iain, 2018. "Local community's preferences for accepting a forestry partnership contract to grow pulpwood in Indonesia: A choice experiment study," Forest Policy and Economics, Elsevier, vol. 91(C), pages 73-83.
    2. Thiene, Mara & Scarpa, Riccardo & Longo, Alberto & Hutchinson, George, "undated". "Front of Pack Food Labels and dietary choice determinants: what works and for whom?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 261225, Agricultural and Applied Economics Association.
    3. Thiene, Mara & Scarpa, Riccardo & Longo, Alberto & Hutchinson, William George, 2018. "Types of front of pack food labels: Do obese consumers care? Evidence from Northern Ireland," Food Policy, Elsevier, vol. 80(C), pages 84-102.
    4. Stuart J. Wright & Caroline M. Vass & Gene Sim & Michael Burton & Denzil G. Fiebig & Katherine Payne, 2018. "Accounting for Scale Heterogeneity in Healthcare-Related Discrete Choice Experiments when Comparing Stated Preferences: A Systematic Review," The Patient: Patient-Centered Outcomes Research, Springer;International Academy of Health Preference Research, vol. 11(5), pages 475-488, October.
    5. Caroline M. Vass & Stuart Wright & Michael Burton & Katherine Payne, 2018. "Scale Heterogeneity in Healthcare Discrete Choice Experiments: A Primer," The Patient: Patient-Centered Outcomes Research, Springer;International Academy of Health Preference Research, vol. 11(2), pages 167-173, April.

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    Keywords

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