Modelling taste heterogeneity among walkers in Ireland

1. Modelling taste heterogeneity among walkers in Ireland Edel Doherty Rural Economy Research Centre (RERC) Teagasc Department of Economics, National University of Ireland, Galway AESI Presentations, Teagasc 5th November 2009 Rural Economy Research Centre

2. Background to the Study • Property rights issues • Currently countryside recreational opportunities are limited in Ireland • Improved recreational opportunities could potentially benefit rural areas • Study aims to examine demand for walking trails on farmland Rural Economy Research Centre

3. Methodology To assess the preferences for attributes of farmland walking trails we employ a discrete choice experiment (DCE) methodology Most commonly applied non-market valuation technique in recent years (Scarpa and Thiene, 2005; Campbell et al., 2008) DCEs ask respondents to pick their most preferred alternative from a number of alternatives based on the attributes of the alternatives (Lancaster, 1966; McFadden, 1974) Rural Economy Research Centre

4. Development of this study Key consideration in DCEs’ is determining the attributes and alternatives that are relevant for the choice tasks Informed by literature, meetings with policy advisors and focus groups Issues identified: access; payment vehicle; managing walking trails; types of farmland Rural Economy Research Centre

5. Rural Economy Research Centre

6. Datasurvey & sample • General Population Survey (2008) • Attitudinal information • Current walking activity information • Choice Experiment (12 Choice tasks) • Specific questions on the choices • Socio-economic information • N= 600 Study is spatially and demographically representative of the Irish adult population Rural Economy Research Centre

7. Random Utility Theory (McFadden, 1974) Individual n chooses the alternative that provides them with the highest utility . Utility consists of an observed (Vni) and unobserved component (εni ): Uni = Vni + εni Individual n chooses alternative i, if and only if: Uni > Unj Since there is a random component in the utility function we can only make probabilistic statements about the choice outcomes: Pni = Prob (Uni > Unj) Different assumptions regarding the distribution of the random component εni lead to different behavioural models Rural Economy Research Centre

8. Behavioural models • For Standard logit we assume eachεnj is independently, identically distributed extreme value so that choice probability is Pni = • Important limitations of standard logit • More flexible models: Random parameters logit (RPL) and latent class models (LCM): advantage – Taste heterogeneity • Taste heterogeneity has been examined in the recreational literature (Boxall and Adamowicz, 2002; Morey et al., 2003; Hynes et al., 2008) • LCM = Rural Economy Research Centre

9. Results Standard logit model Rural Economy Research Centre

10. Results: Latent Class Model

11. Distinct preference groups for walking trails Significant variation in willingness to pay for attributes of walking trails as a function of attitudinal and socio-economic information Other work: Random parameter logit models; substitution patterns; lexicographic decision-making Discussion Rural Economy Research Centre

12. Thank you!