Journal Article

Environmental Quality Preference and Benefit Estimation in Multinomial Probit Models: A Simulation Approach

Heng Z. Chen and Stephen R. Cosslett

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 80, issue 3, pages 512-520
Published in print August 1998 | ISSN: 0002-9092
Published online August 1998 | e-ISSN: 1467-8276 | DOI: http://dx.doi.org/10.2307/1244553
Environmental Quality Preference and Benefit Estimation in Multinomial Probit Models: A Simulation Approach

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Simulated maximum likelihood is used to estimate a random parameter multinomial probit model of destination choice for recreational fishing trips, formulated to accommodate varying tastes and varying perceptions of environmental quality across individuals. The restricted likelihood ratio test strongly rejects the independent probit model, which is similar to the independent logit model in both the parameter and benefit estimates. Furthermore, both the Krinsky-Robb and bootstrapping procedures suggest that the benefit (standard deviation) of an environmental policy is found to be markedly lower (higher) when heterogeneous preferences are taken into account.

Keywords: benefit of environmental site quality change; bootstrapping procedure; Krinsky-Robb procedure; random parameter; constant parameter multinomial probit models; recreational fishing; simulated maximum likelihood estimation; Q260

Journal Article.  0 words. 

Subjects: Renewable Resources and Conservation

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