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Discrete Choice Experiments: A Guide to Model Specification, Estimation and Software

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Abstract

We provide a user guide on the analysis of data (including best–worst and best–best data) generated from discrete-choice experiments (DCEs), comprising a theoretical review of the main choice models followed by practical advice on estimation and post-estimation. We also provide a review of standard software. In providing this guide, we endeavour to not only provide guidance on choice modelling but to do so in a way that provides a ‘way in’ for researchers to the practicalities of data analysis. We argue that choice of modelling approach depends on the research questions, study design and constraints in terms of quality/quantity of data and that decisions made in relation to analysis of choice data are often interdependent rather than sequential. Given the core theory and estimation of choice models is common across settings, we expect the theoretical and practical content of this paper to be useful to researchers not only within but also beyond health economics.

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Notes

  1. This can include presenting a single profile and asking respondents to accept or reject it.

  2. In our case study, the status quo is no treatment; however, more generally, status quo and no treatment need not coincide.

  3. Our overview is not exhaustive, as other software packages capable of estimating some of the discrete-choice models in our review are available. However, the three packages we have reviewed are among the most commonly used for estimating these models.

  4. This implies we will not cover software such as Gauss, Matlab and R, despite there being excellent routines written in these packages for estimating, for example, mixed logit models. A prominent example is Kenneth Train’s codes for mixed logit estimation (http://eml.berkeley.edu/~train/software.html), which served as inspiration for many of the routines later introduced in other statistical packages.

  5. Two versions of Biogeme are available: BisonBiogeme and PythonBiogeme. We focus on BisonBiogeme, which is designed to estimate a range of commonly used discrete-choice models.

  6. Nlogit also optionally allows the data to be organized in wide form, although the manual suggests that long form is typically more convenient.

  7. Interested readers are referred to chapters 8–10 in Train [49] for more information about the issues covered in this section.

  8. Both Nlogit and Stata will use a default set of starting values unless explicitly specified by the user, whereas Biogeme requires the user to specify the starting values.

  9. The default number of draws is 100 in Nlogit, 50 in Stata and 150 in Biogeme.

  10. In models with several random coefficients, alternative approaches such as shuffled or scrambled Halton draws [50] or Sobol draws [51, 52] are sometimes used to minimize the correlation between the draws, which can be substantial for standard Halton draws in higher dimensions. See chapter 9 in Train [49] for a discussion.

  11. Nlogit and Stata’s default starting values are the MNL parameters for the means of the random coefficients and 0 (Nlogit)/0.1 (Stata) for the standard deviations.

  12. Differences can still arise, for example because the optimization algorithms differ in the three packages, subtle differences in terms of how the Halton draws are generated and different starting values (in this case Stata/Biogeme vs Nlogit).

  13. Applying this procedure modifies the data from the standard set-up in Supplementary Appendix 1 to the exploded set-up in Supplementary Appendix 3.

  14. Log-normal parameter distributions are supported by all of the packages. The negative of the log-normal can easily be implemented by multiplying the price attribute by −1 before entering the model. This is equivalent to specifying the negative of the price coefficient to be log-normally distributed. The sign of the coefficient can easily be reversed post-estimation.

  15. One exception is when both the attribute coefficient and the negative of the price coefficient are log-normally distributed, in which case the distribution of mWTP is also log-normal.

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Acknowledgements

The authors thank Peter Ghijben, Emily Lancsar and Silva Zavarsek for making available the data used in Ghijben et al. [11]. All authors jointly conceived the intent of the paper, drafted the manuscript and approved the final version.

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Authors and Affiliations

  1. Centre for Health Economics, Monash Business School, Monash University, 75 Innovation Walk, Clayton, VIC, 3800, Australia

    Emily Lancsar

  2. School of Economics, University of New South Wales, Sydney, NSW, Australia

    Denzil G. Fiebig

  3. Department of Economics, University of Sheffield, Sheffield, UK

    Arne Risa Hole

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  1. Emily Lancsar
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  2. Denzil G. Fiebig
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  3. Arne Risa Hole
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Correspondence to Emily Lancsar.

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No funding was received for the preparation of this paper.

Conflicts of interest

Emily Lancsar is funded by an ARC Fellowship (DE1411260). Emily Lancsar, Denzil Fiebig and Arne Risa Hole have no conflicts of interest.

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Lancsar, E., Fiebig, D.G. & Hole, A.R. Discrete Choice Experiments: A Guide to Model Specification, Estimation and Software. PharmacoEconomics 35, 697–716 (2017). https://doi.org/10.1007/s40273-017-0506-4

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