Showing papers by "Daniel McFadden published in 2006"

Free markets and fettered consumers

Abstract: Are consumers sufficiently self-interested and self-reliant so that privatized markets deliver the efficiency and welfare gains they promise? Why are consumers uncomfortable in markets, and in some case sufficiently opposed to market solutions to prevent their implementation? What can be done to prepare consumers so that they function satisfactorily in markets, and understand the advantages of market-based resource allocation? This paper examines the foundations of consumer behavior and attitudes in markets, and proposes a program of scientific research to determine how consumers cope in privatized markets, and the implications for market design of the limits of self-reliance.

Who Failed To Enroll In Medicare Part D, And Why? Early Results

Abstract: Early results on the Medicare Part D prescription drug program, from a survey of people age sixty-five and older who were interviewed just before enrollment started and just after it ende...

Medicare prescription drug coverage: Consumer information and preferences

Abstract: We investigate prescription drug use, and information and enrollment intentions for the new Medicare Part D drug insurance program, using a sample of Medicare-eligible subjects surveyed before open enrollment began for this program. We find that, despite the complexity of competing plans offered by private insurers under Part D, a majority of the Medicare population had information on this program and a substantial majority planned to enroll. We find that virtually all elderly, even those with no current prescription drug use, can expect to benefit from enrollment in a Part D Standard plan at the low premiums available in the current market. However, there is a significant risk that many eligible seniors, particularly low-income elderly with poor health or cognitive impairment, will make poor enrollment and plan choices.

Estimating Features of a Distribution from Binomial Data

Abstract: A statistical problem that arises in several fields is that of estimating the features of an unknown distribution, which may be conditioned on covariates, using a sample of binomial observations on whether draws from this distribution exceed threshold levels set by experimental design. Applications include bioassay and destructive duration analysis. The empirical application we consider is referendum contingent valuation in resource economics, where one is interested in features of the distribution of values (willingness to pay) placed by consumers on a public good such as endangered species. Sample consumers are asked whether they favor a referendum that would provide the good at a cost specified by experimental design. This paper provides estimators for moments and quantiles of the unknown distribution in this problem under both nonparametric and semiparametric specifications.

The estimation of generalized extreme value models from choice-based samples

Abstract: We consider an estimation procedure for discrete choice models in general and Generalized Extreme Value (GEV) models in particular. It is based on a pseudo-likelihood function, generalizing the Conditional Maximum Likelihood (CML) estimator by Manski and McFadden (1981) and theWeighted Exogenous Sample Maximum Likelihood (WESML) estimator by Manski and Lerman (1977). We show that the property of Multinomial Logit (MNL) models, that consistent estimates of all parameters but the constants can be obtained from an Exogenous Sample Maximum Likelihood (ESML) estimation, does not hold in general for GEV models. We identify a specific class of GEV models with this desired property, and propose a new estimator for the more general case. This new estimator estimates the selection bias directly from the data. We illustrate the new estimator on pseudo-synthetic and real data.

Interstate Wine Shipments and E-Commerce

Abstract: I am an economist, appearing on this panel as an individual at the request of FTC staff. I own a small vineyard in Napa Valley, California, have sold grapes to large and small wineries, and am familiar with the positions taken by many of the people in the wine industry regarding the opportunities and limitations surrounding direct sales of wine to consumers. My intention, however, is to speak here as an advocate for consumers rather than as an advocate for the wine business. My work as a professional economist concentrates primarily on consumer behavior, with applications in marketing, health, and the environment. I do not have a specialty in the economics of the wine industry. I am the E. Morris Cox Professor of Economics at the University of California, Berkeley, and have served as President of the Econometrics Society and as vice-president of the American Economics Association. In 2000, I won the Nobel Prize in Economics for my work on consumer choice behavior. In common with most economists, I believe that consumers benefit from free markets operated with the minimum government regulation required for consumer protection. The history of government regulation of markets is littered with examples of restrictions, ostensibly adopted on behalf of consumers, that instead protect concentrated economic interests at the consumers' expense. The restrictions on direct purchase of premium wines and their interstate shipment that have been adopted by a number of States are, I believe, another example of abuse of the regulatory process to protect concentrated economic interests, going far beyond the minimum regulations needed to maintain the integrity of State taxation and to protect minor consumers.