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Semiparametric Estimation of Willingness to Pay Distributions

Author

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  • Mark Yuying An

    (Duke Uniersity)

Abstract
The most popular survey method used in contingent valuations asks "open-ended" dichotomous choice questions. This method generates grouped or interval-censored data on respondents' willingness to pay. This paper specifies the willingness to pay distribution using the proportional hazard specification in duration analysis. This semiparametric distribution, on the one hand, controls for the effects of observed personal characteristics, and on the other, allows the shape of the distribution to be unspecified. To estimate the willingness to pay distribution from grouped data, we propose both a maximum likelihood estimation method and a minimum Chi-square method. The latter procedure applies to "many observations per cell" cases where the observable covariates are either categorical or amendable to sensible grouping. Specification tests for the proportionality assumption are proposed. The statistical inference procedures are illustrated using the data set from the San Joaquin Valley contingent valuation survey.
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Suggested Citation

  • Mark Yuying An, 1996. "Semiparametric Estimation of Willingness to Pay Distributions," Econometrics 9611001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpem:9611001
    Note: Type of Document - ; prepared on UNIX Sparc TeX; to print on PostScript; pages: 33 ; figures: request from author. We never published this piece and now we would like to reduce our mailing and xerox cost by posting it.
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    References listed on IDEAS

    as
    1. Mark Yuying An & Roberto Ayala, 1996. "Nonparametric Estimation of a Survivor Function with Across- Interval-Censored Data," Econometrics 9611003, University Library of Munich, Germany.
    2. Sueyoshi, Glenn T, 1995. "A Class of Binary Response Models for Grouped Duration Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 411-431, Oct.-Dec..
    3. An, Mark Y. & Roberto Ayala, 1995. "A Mixture Model of Willingness to Pay Distributions," Working Papers 95-21, Duke University, Department of Economics.
    4. An, Mark Y., 1995. "Econometric Analysis of Sequential Discrete Choice Models," Working Papers 95-55, Duke University, Department of Economics.
    5. Carson, Richard T. & Hanemann, W. Michael & Kopp, Raymond J. & Krosnick, Jon A. & Mitchell, Robert C. & Presser, Stanley & Ruud, Paul A. & Smith, V. Kerry & Conaway, Michael & Martin, Kerry, 1996. "Was the NOAA Panel Correct about Contingent Valuation?," Discussion Papers 10503, Resources for the Future.
    6. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    7. Daniel McFadden, 1994. "Contingent Valuation and Social Choice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 689-708.
    8. Han, Aaron K., 1987. "Non-parametric analysis of a generalized regression model : The maximum rank correlation estimator," Journal of Econometrics, Elsevier, vol. 35(2-3), pages 303-316, July.
    9. Klein, Roger W & Spady, Richard H, 1993. "An Efficient Semiparametric Estimator for Binary Response Models," Econometrica, Econometric Society, vol. 61(2), pages 387-421, March.
    10. Horowitz, Joel L, 1992. "A Smoothed Maximum Score Estimator for the Binary Response Model," Econometrica, Econometric Society, vol. 60(3), pages 505-531, May.
    11. Manski, Charles F., 1975. "Maximum score estimation of the stochastic utility model of choice," Journal of Econometrics, Elsevier, vol. 3(3), pages 205-228, August.
    12. Ichimura, H., 1991. "Semiparametric Least Squares (sls) and Weighted SLS Estimation of Single- Index Models," Papers 264, Minnesota - Center for Economic Research.
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    More about this item

    Keywords

    Contingent valuation; Willingness to Pay; Semiparametric Estimation; Minimum chi-square;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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