[Limdep Nlogit List] welfare calculation in discrete choice experiments

Mikołaj Czajkowski miq at wne.uw.edu.pl
Thu Mar 5 01:15:34 EST 2009

Caroline Johanna Biehl wrote:
> Dear all, 
> I have a question concerning welfare calculations (compensating variation CV, Hanemann (1982)) based on a choice experiment. I did a latent class model in nlogit and found 2 distinct classes. I have alternative specific price effects in my model. 
> CV= 1/alpha (ln (sum exp (V0))-ln (sum exp(V1)) )
> Since alpha is supossed to equal the price effect when assuming no income effects, i have now the problem that i have several alphas (for each alternative). Does anyone know how to deal with that?

Dear Caroline,

In virtually all CE applications I have seen the price coefficient was 
not alternative specific. What is your interpretation of alternative 
specific price coefficient? Does it make sense for the marginal utility 
of money to vary with alternative?

Best regards,

    Mikolaj Czajkowski

    Warsaw Ecological Economics Center
    University of Warsaw

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