http://repub.eur.nl/res/aut/2210/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/19644/ 2010-04-28T00:00:00Z Microscopic simulation models are often evaluated based on visual inspection of the results. This paper presents formal econometric techniques to compare microscopic simulation (MS) models with real-life data. A related result is a methodology to compare different MS models with each other. For this purpose, possible parameters of interest, such as mean returns, or autocorrelation patterns, are classified and characterized. For each class of characteristics, the appropriate techniques are presented. We illustrate the methodology by comparing the MS model developed by He and Li [J. Econ. Dynam. Control, 2007, 31, 3396-3426, Quant. Finance, 2008, 8, 59-79] with actual data. http://repub.eur.nl/res/pub/16054/ 2008-01-01T00:00:00Z In this paper we propose a solution to the non-robustness that plagues the estimation of inverted U-shaped relationships using panel data, such as the relation between pollution and income. When dependent and independent variable (like pollution and income) are both time related, separating the effect of the independent variable from time effects brings about a fundamental identification dilemma: the imposition of restrictions on the controls might drive the shape of the relationship between the dependent (pollution) and independent (income) variables. Our solution consists of imposing the very weak constraint that arbitrary cross-sectional units have the same relationship. We apply our methodology to two widely studied cases, namely, SO2 and CO2 emissions. Interestingly, our estimates are insensitive to the required subjective choices, but also strongly differ from the literature so far. We find consistent positive income effects for both cases and time effect estimates with a clear U-shaped trend for SO2-emissions but only slightly so for CO2-emissions. http://repub.eur.nl/res/pub/10607/ 2007-09-13T00:00:00Z The literature that tests for U-shaped relationships using panel data, such as those between pollution and income or inequality and growth, reports widely divergent (parametric and non-parametric) empirical findings. We explain why lack of identification lies at the root of these differences. To deal with this lack of identification, we propose an identification strategy that explicitly distinguishes between what can be identified on the basis of the data and what is a consequence of subjective choices due to a lack of identification. We apply our methodology to the pollution-income relationship of both CO2- and SO2-emissions. Interestingly, our approach yields estimates of both income (scale) and time (composition and/or technology) effects for these reduced-form relationships that are insensitive to the required subjective choices and consistent with theoretical predictions. http://repub.eur.nl/res/pub/841/ 2003-09-08T00:00:00Z General empirical evidence suggests that contracting out refuse collection results in a cost decrease in the order of 20%. However, although the method of contracting out refuse collection has become more popular, it is still less common than in-house provision. This paper investigates the reasons behind this phenomenon. Recently, L?pez-de-Silanes et al. (1997) tried to explain the reservedness of local authorities towards contracting out with US-data and show that political patronage is an important explanation. In this article we give such an empirical assessment using Dutch data. We base our empirical research on the combination of the theories around efficiency, interest group influence and ideology. To test these theories we model the choice between private and public provision of refuse collection on the one hand side and the choice between in-house and out-house provision on the other side. Data are available for nearly all Dutch municipalities. A most striking conclusion is that nearly all political parties in the Netherlands do have a preference for public and in-house provision of refuse collection. We find only modest evidence for the hypothesis that a high level of real estate tax (proxy for the soundness of municipal financial affairs, the efficiency argument) or a low level of unemployment (the interest group argument) raises the probability of private and out-house provision. We find more evidence for the assumed relation between the size of municipalities and private collection. In all cases a smaller municipality has a higher chance of private collection. Therefore, scale effects are important for the choice between public and private provision. For the choice between out-house and in-house collection in relation to scale less evidence exists. Compared with other studies we estimated more general models, allowing for higher order effects and heteroskedasticity. We show that the standard Logit model is too restrictive, both for the choice between private and public provision and the choice between in-house and out-house provision. Signs and significance do differ between the different models. Especially, for the choice between in-house and out-house provision the applied model matters. In this case, only unemployment and municipality size has influence. Thus, more attention is needed for the implications of model choice for the explanation of the raised questions. http://repub.eur.nl/res/pub/11259/ 2003-06-01T00:00:00Z In this paper we seek an explanation for the reservations of local authorities towards contracting out. Although empirical evidence suggests that contracting out results in a significant cost decrease, a majority of Dutch municipalities provides for waste collection services themselves. Based on theoretical insights we model the choice between private, public, in-house, and out-house refuse collection. The models are estimated using a database comprising nearly all Dutch municipalities. We find evidence that the number of inhabitants, the transfer by central government, and interest group arguments are important explanations. Interestingly, ideology seems to play a minor role. Compared to earlier studies we estimate more general models. Although the same qualitative results are found for parametric and semiparametric models, we find strong statistical evidence that a parametric specification is far too inflexible. Differences between the parametric and the semiparametric marginal effects are substantial. Thus, more attention is needed for the implications of model specification. http://repub.eur.nl/res/pub/586/ 2002-02-07T00:00:00Z Binary choice models occur frequently in economic modeling. A measure of the predictive performance of binary choice models that is often reported is the hit rate of a model. This paper develops a test for the outperformance of a predictor for binary outcomes over a naive prediction method, which predicts the outcome that is most often observed. This is done for a general class of prediction models, including the well known Probit and Logit models. In many cases the test is easy to compute. The test is then applied and compared to a general test of Pesaran and Timmermann (1992) for dependence between predictors and realizations. http://repub.eur.nl/res/pub/11501/ 2001-01-01T00:00:00Z Attitudes towards risk play a major role in many economic decisions. In empirical studies it is quite often assumed that attitudes towards risk do not vary across individuals. This paper questions this assumption and analyses which factors influence an individual's risk attitude. Based on questions on lotteries in a large household survey we first semiparametrically estimate an index for risk aversion. We only make weak assumptions about the underlying decision process and our estimation method allows for generalisations of expected utility. We then estimate a structural model based on Cumulative Prospect Theory. Expected utility is strongly rejected and both the value function and the probability weighting function vary significantly with (among other things) age, income, and wealth of the individual.