[Limdep Nlogit List] Choice of data to use [Medard]

Fri Mar 14 23:10:54 AEDT 2025

Hello Girma,
Thank you for the quick response and the insights.
In response to the design flaw that you mentioned, I did not see the need
to include the never users in the DCE because no new product attribute is
being introduced. All the attributes used have been in existence in the
other competing products (like inorganic fertilizers or organic fertilizers
from other materials besides solid waste). What I want to achieve is that
if someone wants to engage in converting solid waste into fertilizer, how
should the final product be presented to the market to compete with what is
already there?  My reasoning is that if someone has never used any form of
fertilizers, then they do not know anything about the attributes in the
first place.  It is just like asking a person who has never owned/driven a
car the car attributes they prefer. They simply cannot trade one
attribute/level for another because they have no prior experience with
the product.

Yes, I estimated models using both data sets and the signs of the utility
coefficients appear reasonable in both. However, most of the wtp values in
the 'users only' data are negative because of the positive price
coefficient.

I am using Random Parameters logit  and generalized mixed logit models, so
preference heterogeneity is taken care of.

Regards,

Medard

On Fri, Mar 14, 2025 at 1:07 PM Kassie, Girma Tesfahun (ICARDA-Morocco) via
Limdep <limdep at mailman.sydney.edu.au> wrote:

> Hi Medard -
>
> You have an interesting discrete choice experiment (DCE). Let me share my
> take on where the problem lies and what you could possibly do.
>
> It is important to remember that stated choice methods (SCMs) help us
> understand individual's preferences for different attributes of a given
> good or service, price included. This applies regardless of their current
> behavior. Therefore, those sample units who never used fertilizer should
> have been part of the DCE as they might be open to using organic solid
> waste fertilizer under certain conditions. The opt out option could not be
> assumed to reflect the stated preferences of the never users. Rather it is
> their revealed preference under their current circumstances. Including them
> in the DCE could have allowed you to explore if those people would change
> their preferences under different conditions. So, there is a design flaw
> that you would have to address.
>
> Your approach of appending the never users in the analysis, as if they all
> opted out, is an innovative thing to do in my opinion. However, you would
> have to make a good justification as to why you are doing that given the
> problem discussed above. You can estimate the models with and without the
> never users and see how the marginal utility and wtp values behave.
>
> The coefficient of price could be positive due to many reasons. If you
> believe that is has to have a negative marginal utility and unless your
> sample is too small, check whether there is preference heterogeneity that
> needs to be explained and whether you might revise your model specification
> [interactions or entering categorical vars as continuous or vice versa.]
>
> Good luck -
>
> Girma.
>
> ==========================================================
>
> Girma T. Kassie (PhD)
>
> Principal Ag. Market Economist
>
> ICARDA
>
> Rabat, Morocco
>
>
>
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>    1. Choice of data to use (medard kakuru)
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> Message: 1
> Date: Thu, 13 Mar 2025 11:33:04 +0300
> From: medard kakuru <medakseth at gmail.com>
> To: Limdep and Nlogit Mailing List <limdep at mailman.sydney.edu.au>
> Subject: [Limdep Nlogit List] Choice of data to use
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> Dear Members,
> Please advise on which data set to use.
> My study is about estimating willingness to pay (wtp) for organic solid
> waste fertilizer. I used a choice experiment (CE) with two alternatives and
> an opt-out/no choice. During data collection, to ensure random sampling, I
> interviewed farmers who had ever used any fertilizer and those who have
> never. Those who said never were not given the choice sets to elicit wtp.
>
> The first set of results is using the entire sample (both ever and never
> used fertilizers). This implies that there is missing CE data for  those
> who have never. I circumvent this by assuming that these farmers, if they
> had been given the choice sets, would opt-out/ make no choice. I get good
> results, even the price parameter is negative and significant.
>
> The second set of results is using only a subset of only those given the
> choice sets (ever used fertilizers). The price parameter is positive and
> significant, contrary to economic theory.
>
> Please, advise on which dataset I should consider for my analysis.
>
> PS. I estimated mixed logit models in utility space and wtp space
>
> Regards,
>
> Medard
>
>
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