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A Joint Latent-Class Model: Combining Likert-Scale Preference Statements With Choice Data to Harvest Preference Heterogeneity

Environmental and Resource Economics volume 50, pages 83–110 (2011)Cite this article

Abstract

In addition to choice questions (revealed and stated choices), preference surveys typically include other questions that provide information about preferences. Preference-statement data include questions on the importance of different attributes of a good or the extent of agreement with a particular statement. The intent of this paper is to model and jointly estimate preference heterogeneity using stated-preference choice data and preference-statement data. The starting point for this analysis is the belief that the individual has preferences, and both his/her choices and preference statements are manifestations of those preferences. Our modeling contribution is linking the choice data and preference-statement data in a latent-class framework. Estimation is straightforward using the E-M algorithm, even though our model has hundreds of preference parameters. Our estimates demonstrate that: (1) within a preference class, the importance anglers associate with different Green Bay site characteristics is in accordance with their responses to the preference statements; (2) estimated across-class utility parameters for fishing Green Bay are affected by the preference-statement data; (3) estimated across-class preference-statement response probabilities are affected by the inclusion of the choice data; and (4) both data sets influence the number of classes and the probability of belonging to a class as a function of the individual’s type.

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Abbreviations

E-M algorithm:

Expectation-maximization algorithm

WTP:

Willingness-to-pay

FCA:

Fish consumption advisory

MWTP:

Marginal willingness-to-pay

SP:

Stated preference

RP:

Revealed preference

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Author information

Authors and Affiliations

  1. School of Business and Economics, Michigan Technological University, 126 Academic Office Building, 1400 Townsend Dr, Houghton, MI, 49931-1295, USA

    William S. Breffle

  2. Department of Economics, University of Colorado-Boulder, Boulder, CO, USA

    Edward R. Morey

  3. Department of Economics, University of New Mexico, Albuquerque, NM, USA

    Jennifer A. Thacher

Authors
  1. William S. Breffle
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  2. Edward R. Morey
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  3. Jennifer A. Thacher
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Corresponding author

Correspondence to William S. Breffle.

Additional information

William S. Breffle, Edward R. Morey, Jennifer A. Thacher have equally contributed.

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Breffle, W.S., Morey, E.R. & Thacher, J.A. A Joint Latent-Class Model: Combining Likert-Scale Preference Statements With Choice Data to Harvest Preference Heterogeneity. Environ Resource Econ 50, 83–110 (2011). https://doi.org/10.1007/s10640-011-9463-0

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  • DOI: https://doi.org/10.1007/s10640-011-9463-0

Keywords

  • Latent class
  • E-M algorithm
  • Choice data
  • Preference statements
  • Likert-scale
  • Preferences
  • Heterogeneity

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