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1996•American Journal of Agricultural EconomicsRequires access

The Implications of Model Specification for Welfare Estimation in Nested Logit Models

Catherine L. Kling, Cynthia J. Thomson

Open publisher page 111 citations

Abstract

Abstract Nested logit models are increasingly being used to value environmental amenities. The implications of nesting structure, choice of estimator (FIML or sequential), and restrictions on parameters across nested groups on welfare estimates are examined. These issues have received little previous attention. Model selection criteria that can be used to distinguish among the models are extended and applied. Additionally, a simulation procedure is implemented to construct standard errors for the welfare measures.

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What this paper is about

Abstract Nested logit models are increasingly being used to value environmental amenities. The implications of nesting structure, choice of estimator (FIML or sequential), and restrictions on parameters across nested groups on welfare estimates are examined. These issues have received little previous attention. Model selection criteria that can be used to distinguish among the models are extended and applied. Additionally, a simulation procedure is implemented to construct standard errors for the welfare measures.

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Available abstract

Abstract Nested logit models are increasingly being used to value environmental amenities. The implications of nesting structure, choice of estimator (FIML or sequential), and restrictions on parameters across nested groups on welfare estimates are examined. These issues have received little previous attention. Model selection criteria that can be used to distinguish among the models are extended and applied. Additionally, a simulation procedure is implemented to construct standard errors for the welfare measures.

Key concepts: Nested logit, Econometrics, Estimator, Logit, Welfare, Mixed logit, Economics, Nested set model

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