Two-Stage Estimation to Control for Unobservables in a Recreation Demand Model with Unvisited Sites
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The role of unobserved site attributes is a growing concern in recreation
demand modeling. One solution in random utility models (RUM)
involves separating estimation into two stages, where the RUM model is
estimated with alternative-specific constants (ASCs) in the first stage,
and the estimated ASCs are regressed on the observed site attributes in
the second stage. Prior work estimates the second stage with OLS and
2SLS regression. We present an application with censored regression
in the second stage. We show OLS produces inconsistent parameters
when there are unvisited sites with no estimable ASCs and that censored
regression avoids this problem.