Dr Katrina Davis, Dr Simone Valle De Souza (UNE) and Dr Robyn Hean (UNE)

UNE Business School was recently pleased to host Dr Katrina Davis from the University of Queensland for our seminar series.

Models to analyse discrete choice data that account for heterogeneity in error variance (scale) across respondents are increasingly common, e.g. heteroscedastic conditional logit or scale adjusted latent class models. This paper identifies an issue with interpretation of significance within these models, due to sensitivity of reported results to arbitrary variable-normalization decisions. We demonstrate this issue using two empirical examples from discrete choice experiments, analysed using heteroscedastic conditional logit and scale adjusted latent class models. Our first empirical example is from a study which explored the preferences of a sample of 318 people regarding a marine biodiversity offset package with multiple attributes. Our second example uses a data set derived from a major study of public values for marine ecosystems. We show that analysts may incorrectly conclude that preferences are consistent across respondents even if they are not, or that classes of respondents may have (in)significant preferences for some or all attributes of the experiment, when they do not. We advocate the use of willingness-to-pay (WTP) space models to avoid this, as estimates of WTP do not exhibit this effect. However, in cases where error variance may be high, we question whether it is correct to infer that all respondents should be considered to hold a common WTP.

The full seminar can be accessed via the Seminar Series web page.

Dr Katrina Davis is a Postdoctoral Research Fellow in the Centre for Biodiversity and Conservation Science, School of Biological Sciences, The University of Queensland, focusing on the economics of conservation. Her research investigates optimal use of natural resources to maximise the productivity of human and ecological systems. She is interested in how management costs can be incorporated into spatial planning, and how these costs will affect the success of management outcomes and stakeholder-engagement with zoning regimes. Her current research examines how to integrate expert and stakeholder preferences for marine ecological features by incorporating non-market valuation into marine spatial optimisation. Dr Davis completed her PhD, entitled ‘Economic benefits and costs of spatial marine management,’ in 2015 through the University of Western Australia under the tutelage of Professor David Pannell, Dr Marit Kragt and Dr Steven Schilizzi. As part of her PhD she worked with Dr Stefan Gelcich and Professor Juan Carlos Castilla at the Chilean Catholic University to investigate optimal management of coastal marine environments in Chile. Dr Davis has a Bachelor of Science (First Class Honours) in Environmental & Natural Resource Economics from the University of Western Australia, and a Bachelor of Arts (Dance) from Edith Cowan University. Dr Davis’ most recent publication was an assessment of why artisanal fishers in Chile might choose not to enforce their marine user rights, published in the journal of Environmental & Resource Economics. In 2015, her paper ‘Accounting for enforcement costs in the spatial allocation of marine zones’, won the Australian Agricultural and Resource Economics Society ‘Quality of Research Communication’ award, and the ‘Best Work Accepted for Publication’ award from the University of Western Australia.