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Willingness to Pay for Rural Landscape Improvements: Combining Mixed Logit and Random‐Effects Models
Author(s) -
Campbell Danny
Publication year - 2007
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.2007.00117.x
Subject(s) - mixed logit , willingness to pay , econometrics , explanatory power , discrete choice , logit , economics , sample (material) , panel data , random effects model , logistic regression , welfare , estimation , statistics , mathematics , microeconomics , medicine , philosophy , chemistry , meta analysis , management , epistemology , chromatography , market economy
This paper reports the findings from a discrete‐choice experiment designed to estimate the economic benefits associated with rural landscape improvements in Ireland. Using a mixed logit model, the panel nature of the dataset is exploited to retrieve willingness‐to‐pay values for every individual in the sample. This departs from customary approaches in which the willingness‐to‐pay estimates are normally expressed as measures of central tendency of an a priori distribution. Random‐effects models for panel data are subsequently used to identify the determinants of the individual‐specific willingness‐to‐pay estimates. In comparison with the standard methods used to incorporate individual‐specific variables into the analysis of discrete‐choice experiments, the analytical approach outlined in this paper is shown to add considerable explanatory power to the welfare estimates.