Nonlinear Income Effects in Random Utility ModelsReview of Economics and Statistics
Publication VersionPublished Version
AbstractRandom utility models (RUMs) are used in the literature to model consumer choices from among a discrete set of alternatives, and they typically impose a constant marginal utility of income on individual preferences. This assumption is driven partially by the difficulty of constructing welfare estimates in models with nonlinear income effects. Recently, McFadden (1995) developed an algorithm for computing these welfare impacts using a Monte Carlo Markov chain simulator for generalized extreme-value variates. This paper investigates the empirical consequences of nonlinear RUMs in the case of sportfishing modal choice, while refining and contrasting the available methods for welfare estimation.
Copyright OwnerMIT Press
Citation InformationJoseph A. Herriges and Catherine L. Kling. "Nonlinear Income Effects in Random Utility Models" Review of Economics and Statistics Vol. 81 Iss. 1 (1999) p. 62 - 72
Available at: http://works.bepress.com/catherine_kling/5/