Preferences for tap water attributes within couples: An exploration of alternative mixed logit parameterizations

Abstract

Preferences for attributes of complex goods may differ substantially among members of households. Some of these goods, such as tap water, are jointly supplied at the household level. This issue of jointness poses a series of theoretical and empirical challenges to economists engaged in empirical nonmarket valuation studies. While a series of results have already been obtained in the literature, the issue of how to empirically measure these differences, and how sensitive the results are to choice of model specification from the same data, is yet to be clearly understood. In this paper we use data from a widely employed form of stated preference survey for multiattribute goods, namely choice experiments. The salient feature of the data collection is that the same choice experiment was applied to both partners of established couples. The analysis focuses on models that simultaneously handle scale as well as preference heterogeneity in marginal rates of substitution (MRS), thereby isolating true differences between members of couples in their MRS, by removing interpersonal variation in scale. The models employed are different parameterizations of the mixed logit model, including the willingness to pay (WTP)-space model and the generalized multinomial logit model. We find that in this sample there is some evidence of significant statistical differences in values between women and men, but these are of small magnitude and only apply to a few attributes.